Tag Archives: compensation

Kaepernick and the Importance of “All The Other Things”

Yesterday’s hero is tomorrow’s bum.  It is a sad fact of life, regardless of industry, sport, volunteer organization or community group.  Rarely does one person succeed or fail alone, however it is far easier to lay the blame on one individual than to take a hard look at an entire organization.  Colin Kaepernick was able to reap the glory and the rewards as an NFL quarterback when he was the face of the 49ers in their Super Bowl and NFC Champion teams.  Less than two years removed from such heights, he is paying the price as the franchise struggles, finding himself benched.  How quickly things change.

Colin Kaepernick’s fall from grace parallels the 49ers slide from the top echelon of the NFL.  As with most things in life, there is plenty of blame to go around, and the truth tends to lie somewhere in the middle.  It is highly doubtful that Kaepernick suddenly forgot how to play the game, that his talent suddenly evaporated.  Conversely, the organization did not suddenly implode.  The other players did not suddenly forget how to block, run, catch and defend.  However, this story is a great reminder that there is a lot more to career decisions than just money.

There tends to be 5 criteria or “buckets” that enter into the decision-making process regarding jobs and/or job changes:

  • What is the job?  What is it you will be doing?
  • Who will you be working for and with?
  • The culture/environment/dynamic of the organization, industry and team
  • Are you set-up for success? Do you have the resources, support, etc.
  • What is the compensation and how are you paid?

There is actually a rank order to that list, and while the middle three can change in relative importance, the first and last items are and should remain where they are, first and last.  What you will be doing trumps all else, and compensation only matters if the previous four items are in alignment.  While most folks agree with the 5 items, many disagree with the relative order.  Most folks place compensation above all else, and that is where most problems start.

Looking at the above list relative to Colin Kaepernick, it is easy to see how the first item did not change – he was a quarterback and his job did not change.  Did he fail to develop his professional skills?  Did the competition improve their game? In both cases, probably yes, but in the end, he did not suddenly forget how to be a quarterback.

Who he is working for and with changed dramatically.  Jim Harbaugh left as head coach, and with him went the entire coaching staff.  The individual players who make up the team also went through massive change.  While the job did not change, his leadership, his coaches, his coordinators, and his co-workers all changed.  That is an enormous issue.

With leadership change comes cultural and organizational change.  Sometimes it is good, sometimes it is bad, but it does change.  By all accounts, the 49ers were a well run, professional, no-nonsense organization before.  Now, well they seem to be struggling to find an identity; they are not the organization they were when they were winning.

Change the members of the team, change the leadership, and change the culture, and the result is you change the very things that enable one to succeed.  Talent, hard work, dedication, and passion can only get one so far.  To borrow a phrase, to one degree or another, it actually does “take a village”.  For Kaepernick, the talent around him on the field, on the sidelines, in-game planning and preparation, the culture of the locker room, in the front office, everything changed.  Apparently not for the better.  Regardless, it is not a scenario where one is set-up for success.

In less than 2 seasons, he and the team have become a glaring illustration of how there is much more to the debate than just compensation.  Kaepernick, based on his earlier success, was able to secure a lucrative contract.  Good for him.  It is not healthy to begrudge someone getting paid.  However, his level of compensation impacted what the organization had available to pay others.  The team around him slipped in talent level.  There was a conflict in leadership, and his coaching staff changed.  The culture around him and the general work environment changed, and the support and tools to succeed went away.

When debating that next promotion, that great new job with the great pay, the new bonus potential, the corner office, the sweet benefits, the next contract, stop and think about Colin Kaepernick.  Pro Bowler, Super Bowl playing, NFC Championship winning quarterback, huge new contract, to the bench in less than 2 years.  Sure, he gets some of the blame, but just as his success was not a one man show, neither is his failure.  Take a hard look at that offer, make sure what the job is, who you will be working for and with, do you have the resources, is the corporate culture good, and then worry about the money.

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Peyton Manning and Picking the Right Job

Like a lot of folks, was not able to escape the Peyton Manning touchdown record hype Sunday night.  And like the total pro that he is, Peyton delivered.  Breaking and then setting a new record in front of a national television audience.  Not a bad nights work.  Peyton Manning…always a professional, never any issues in public or private, by all accounts an all around good guy, not to mention a pretty inspiring story, returning to the top of his game after major surgery.  All of that said, Peyton Manning has reminded us of another lesson that goes largely unnoticed, but is of immense value to anyone who is trying to manage their career, choose wisely.

Peyton has been smart enough to choose where he works not based on money, but rather where he will have the best circumstances for success. He picks his work place based on culture, organization, leadership, coworkers, and environment.  When it is stripped down to the core, Peyton Manning sets himself up to succeed.  That is wisdom.  Sure, he makes a ton of dough wherever he has chosen to play, but he has never absolutely maximized his earning potential, at least in the realm of football.  There is no question he could demand and get top dollar from any team, yet he has never parlayed his success into a bidding war.  He realizes, and this is easy to do when making millions, that success will generate more income beyond just the “starting salary”.

It is a common theme in business, income maximization.  We fully support capitalism and are all about everyone making as much as possible.  That said, it is often the top reason we hear when someone is debating making a career change, or when they are debating offers.  However, where the disconnect comes in is when compensation drives the decision on what job to take, what company to join, what industry to be in, or what offer to accept or decline.  It is certainly important, but it is not the only issue.  Sure, it is easy to look at Peyton Manning and think “but he is making millions”.  Move the decimal point to the left and the issues become the same for him as they are for any of us.

One maxim we have realized over the years in this business, compensation rises in direct proportion to success.  People that are really good at their jobs tend to make, well more than their peers.  And success is directly proportional to happiness.  People that are happy with their job, their company, their industry, their teammates, leadership, corporate culture and environment, are almost always the most successful.  Find the place where you are set up to succeed, and the money will follow.

Peyton Manning has enjoyed an enormous amount of success on the football field.  That success has made him a wealthy man.  His income has been made on the field, but it has also been significantly enhanced by off field ventures.  Peyton’s wisdom is in how he has set himself up for success.  He chose his university, stayed with the Colts for years, and ultimately chose the Broncos because each of those organizations offered him the best chances for success.  And with that success has come a ton of money, both on and off the field.  Smart dude that Peyton Manning.

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Incentivizing Behavior and Changing Outcomes

Incentivize the desired behavior. It is a classic piece of compensation modeling – pay your people to do what it is you want them to do. You want sales numbers to go up, pay your sales people for new business. You want higher quality controls, more widgets produced, incentivize your people accordingly. So simple really, yet the corollary to that is rarely, if ever discussed – do not reward people for doing what you do not want done.  And the part which is never discussed openly, is risk versus reward – what are the temptations to cutting corners to meet the incentives?

Sunday’s New York Times Opinion Page included a piece by Johnathan Vaughters, a former professional cyclist and now the executive director of Slipstream Sports.  The column was much more than an opinion piece, rather it was a confessional under the title How to Get Doping Out of Sports . In the course of the column, he shares a great deal of insight into why one would decide to dope.  But one point above all others stayed with me, and he is dead on correct, no one should ever be put in a position to have to decide to cheat. In sport, business, or just life in general – it is not a dilemma anyone should face. However, there also seems to be more there that he is not mentioning; specifically that the reward for doping far outweighed the risk of being caught.  And that issue, which seems to go far beyond cycling and sports, is the real issue that is not being addressed.

Yes, I am a total outsider.  The extra 2% advantage that he mentions doping might provide, well that still would leave me a solid 40% short of the ability needed to compete at a professional level.  Yet, I find myself understanding the choices he faced and choices he made.  While I might be as honest and ethical as most, I am also no naive fool.  Look at the choice – cheat, in an environment where it is for all intents and purposes accepted, and make literally millions – provide a life for you, your family, your extended family, generate revenues to support others on the teams, and their family, or simply walk away from your dream, your career and frankly the only real opportunity you might ever have for a profession. Yea, I get it.

And to me there in lies the real issue.  The risk-reward paradigm was completely out of whack in cycling, and to a degree it still is.  It was massive upside for limited downside.  And why that lingered with me is that so much of our society seems to now be tilted in that very same way.  Let’s face it, all of the issues with “Wall Street Bankers” – how many have went to jail or lost real money?  There is Bernie Madoff, and then…?  That is the point, there is no real risk to balance out the rewards.  We have incentivized winning at all costs in sports and business.  Well, sports is business, so it is all the same.  It was the reality of the “housing crisis” and is still a reality in our society – there is no real risk to getting yourself over levered.  We allow folks the ability to walk away from debt by filing some form of bankruptcy.    It might sting a little, but it is not that big of a deal, nothing tangible is really lost.  Just look around – people are literally doing it all the time.

Balancing risk and reward lies far beyond testing, regulations and controls. The real answer lies both in how you incentivize and the level of risk associated with “doing whatever it takes” to reach the goal.  It is something every leader and manager, coach, business owner and frankly political leader really needs to consider – is the incentive to achieve outweighing everything else?

The real answer to cleaning up sports, business, and yes even behavior in general, is not to punish forward.  The answer lies in punishing backwards.  The risk has to outweigh the reward, and that is only possible when the very reward itself that spawned the behavior in question is put at risk.  And let’s be very clear, we are not talking titles and jerseys, promotions or corner offices, we are talking dollars.  If we want to keep rewards high, which is fine with me, I am a big supporter of everyone making a ton of dough, then make the risks to breaking the rules just as high if not higher.  Make the risk the very thing that they earned by cheating.  Congressman trades on insider information and makes money – they lose the office AND the money they made.  Cyclist cheats to win – they lose the salary, the winnings, the sponsorship and endorsement money, all of it that was earned by cheating.  Clawback.  That is a risk that will trump a reward.

It is not about banning someone from sport for a game, the post season, or even a year or two – clearly that has helped, but it has not solved the problem.  Peer pressure and cultural changes in sport, that has also helped.  However, the pain threshold is not high enough yet.  Even when an athlete is caught doping, they have already reaped the benefits of cheating!  You want to stop doping in professional sports – hit the incentive – take back what was earned through cheating.  Going forward, make salary, prize money, and above all, sponsorship and endorsement money all subject to a “clawback” clause.  It is outlined in the contract and then enforced.  That will stop doping.  The risk then truly outweighs the reward.

There it is, the real answer – clawback.  It is a form of risk that is real to everyone for it attacks the very incentive that spawned the behavior you are trying to correct.  Maybe a bit harsh, but the decision Johnathan Vaughters was faced with, and made, at that time in place seems to surround a good many of us in every walk of life.  No one should be placed in a situation where the wrong path is the more rewarding and easier path.  Putting that temptation out there to begin with is wrong.  Look around you, the fallout is literally everywhere.

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There is a Price

It is a story making the rounds in the sporting and baseball world – Colby Lewis, a pitcher for the Texas Rangers, took paternity leave for the birth of his second child.  In so doing, he missed a start.  As part of the players contract with MLB, paternity leave is allowed, and by all accounts it was something he and team management had planned for in advance.  Overall, not really a big deal to those involved.  However, to others it was a huge deal.

As we hear so often, “I can do the job without…moving/traveling as much/taking away from the family” or a variety of similar thoughts…all of which have merit.  Typically the person is absolutely correct. They can “do” the job.  However, there is a massive difference between “doing” and “doing well”.   In our world, “doing” is not enough. “Good enough” is not even enough.  It applies at all levels, but is magnified the more senior the role.

This is not just a business phenomena either.  Think for a moment about academics.  The days of an “A/B student” earning admittance to the state’s flag-ship university or a top tier private school are well in our collective past.  The same applies to youth sports.  Just playing school sports, and heaven forbid 3 different sports – never.  Dedicated club and travel teams, skills coaches and camps, high-end gear and diets.  The expectations and results oriented bar have moved up in all aspects of our world.  And that level of achievement requires real sacrifice.

Who am I to say what is or what is not an appropriate level of sacrifice.  But I will say that it is naive to assume there is not a level of expectation when it comes to what one is willing to give.  And rest assured, that level of expectation moves up as the reward, scope of responsibility, and level of accountability increases.  There is a reason companies pay big money for big roles, big producers, and big time leaders – those roles demand a great deal.  The reward reflects the level of sacrifice.

The more compensation the company is giving, the more effort they will demand.  Maybe you sincerely believe you can “do the job” without really giving what it takes, but eventually that bill will come due.  Companies are not looking for “good enough”, they are looking for “great” – always.  National Directors, General Managers, VP’s, CEO’s and even professional athletes – reaching that level required great sacrifice.  Staying at that level AND excelling will require even more.

The title, the corner office, the big pay check, the slot in the starting rotation.  Eventually we all need to really look at what we want relative to what we will give.  It is one of the toughest equations to solve, but it is one we all have to address.

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Thank You Gil Meche

$12 million. Let that sink in for a minute. $12 million. Now granted, you already have booked $40 million give or take, but still 20% or so of your potential lifetime earnings surrendered…willingly. One interesting story. Surrendered out of principle. Now that’s impressive.

In an era of “everything in the name of a dollar”, we see someone, a professional athlete of all things, willingly leave behind money because they did not feel right taking it.  Seriously?  It is so refreshingly.  His statement of “I was not earning my money” is so honest it is quite literally unbelievable.

By the way, somebody needs to get Gil Meche on the speakers circuit.  Dare I say he could make a couple extra dollars telling his story…maybe it would resonate.  He could start at AIG.  There is quite literally no end to the number of organizations that would benefit from hearing his story.

Yes, it is much easier to be principled when you have $40 million in the bank.  I admit, that was my initial reaction, but that is what makes Gil Meche’s actions all the more impressive.  Who in sports, in entertainment, or in business, takes that sort of principled stand even when they have $40 million in the bank?  Though I am not sure of the actual number, I am confident saying it is damn few.  It is so rare that this story is special.  It should not be, but it is.

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The Behavior and Feedback Loop

The first week of October is quickly becoming “the week of dope” – and not in a Randy Jackson American Idol sort of way.  First we hear that Alberto Contador, the recent Tour de France winner has tested positive not just for trace amounts of a PED, but also for a plastic residue found in blood bags.  Then, we hear ever so quietly that Steve Gregory of the San Diego Chargers popped positive.  To hear a cyclist popping, even the face of the sport, is not too terribly unexpected – they are tested constantly.  To hear of an NFL player – that was surprising.   Not surprising in that I am naive enough to think there are no PEDs in football.  Rather surprising in that for someone to pop in such a lightly tested sport is almost a miracle.

Again, a huge thank you to the world of sport for providing a reflection of life. This time they help us see ever so clearly how behaviors are reinforced and perpetuated based upon feedback. Call it risk versus reward; positive or negative reinforcement.  There is no question behaviors are encouraged or discouraged based upon the feedback the behavior elicits. And we all know, we cannot mention the world of sport without mentioning Performance Enhancing Drugs.

So what does any of this have to do with behavior?  Consider this – Contador is looking at a 2 year suspension.  Gregory – 4 games.  Seriously, 2 years versus 4 weeks.  Bash the Olympic sports all you wish, but there is no question they are serious about trying to eliminate doping in their sports.  Clearly the NFL does not really care.  The players know it and will act accordingly.  The rewards far outweighs the risk in professional sports – at least in the United States and certainly in the NFL.

It is the ultimate question for leaders, coaches, educators and even parents – how does one influence behavior?  How can you get someone to do, or not do, something?  There are countless answers to that question, but one of them is clearly based on feedback.  What feedback are you providing for certain behaviors?  Are your actions, or inaction, encouraging or discouraging certain behaviors.  Think about sports and the culture of doping – what message do the individual sports send to their players and their fans?  Telling on a host of levels.

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Experiences and Achievements – Coach K’s comments

Duke’s Coach Krzyzewski was asked in an interview prior to Monday’s NCAA Men’s Basketball Championship game if his past achievements and experiences would be an advantage for his team in the upcoming game with Butler. His answer was incredibly insightful. To paraphrase (Google cannot seem to find the transcript – amazing), he said that his past experiences coaching in championship games does have some relevance and might be helpful.  He then went on to say his past achievements are absolutely worthless in that setting.  One has to divorce the achievement from the experience.

So much value in such a statement. What we have experienced, and the lessons we have learned from those experiences are extremely valuable.   However, what we have achieved is in the past. It does not impact the future.  All too often the assumption is that what we have achieved in the past is of use going forward.  The achievement is not – the experience is.  How something was achieved, the actions taken, the lessons learned, the efficiencies gained, the insight won, the vision realized can be applied going forward.  It holds value to for us and those around us.

All too often we hear the line of reason that “I have achieved so much, it should be valued by the new company”or  “I have earned x and that is my minimum income requirement going forward”.  To stay with the sports analogy, Duke and Coach K could have very easily had the mindset that they have won 3 other championships and have been to 11 Final Fours – Butler has achieved nothing.  Understandable, and we all empathize, but in the end, that is an achievement paradigm.  “I earned it” or “it is owned to me” is past, not future tense.  The achievement is not valued today – it is past.  It is the experience that is valued going forward…if it will be leveraged.

Relating the experience of a particular achievement is the art of interviewing, and the art of leading.  Because you did something in the past, while nice to know about, is not the end all issue.  Life, business, academics, sports, everything is about moving forward.  Resting on past laurels will get you nowhere.  Leveraging the experience of past achievement is what leads to future success.

There is no questioning Mike Krzyzewski’s achievements – he wins.  However it is his mindset that allows him to keep winning.  He leverages the experience and leaves behind the achievement.  Simple in a way, yet a profound bit of wisdom.

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Your “Value” and Your Compensation

It is the ultimate “Third Rail” issue in business – is compensation really an accurate reflection of ones relative value to an organization? What is my “Market Value”?  What am I worth?  How much can I get paid?  Am I being underpaid?  Fair questions, and a natural part of anyones thoughts as they evaluate their career and professional growth.  However, if the last year has taught us anything, it is not just a question of are you getting paid enough, it can become a question of if you will get paid at all.

Everyone, in every role, at every level, in every organization had better be able to directly and clearly point to how they are helping the company provide their goods or service.  The days of “nice to have” and “extra” are behind us when it comes to business – especially when it comes to headcount.  Every single person has to be a contributor.  They must add revenue, protect existing revenues, or fill a vital support role.  For some this is fairly easy to quantify (sales, business development, client service, operations,etc.) while for others (IT, HR, support, training, etc.) it can be harder to quantify.  Regardless of the “degree of difficulty”, we owe it to the company, and especially to ourselves, to really identify how we are a critical player – how we are contributing.

As we commented on in some earlier posts, specifically in “Past Performance is no Guarantee of Future Results” and “Compensation Comments…Redux“, there is a great deal that goes into compensation and “value”.  However, when it is stripped down to its most basic premise, it is all about how much you and your role impact the companies revenue – do you contribute to the bottom line?  Do you personally help the company provide their particular good or service – are you an integral part of what makes the company successful.

In summary, there is no direct answer.  In the end it is a fundamental issue – does your presence and role in the organization add to the bottom line.  Are you a source of revenue or a cost?  Sometimes it is easy to quantify and answer that question.  Other times it is not so easy.  But in the final analysis, your relative value and your role in an organiztion is directly proportional to how much you are tied to their revenue going forward.  Revenue production that is…

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Of GM, ND and Realistic Expectations

Head Football Coach at Notre Dame. CEO for GM.  Couple prestigious job opportunities have come open in the last few days.  Dare I say each will also bring a healthy compensation plan and just a few “additional benefits”.  However, just because the job sounds great, it does not mean it is the right next move for you, either professionally or personally.  Sometimes there is a great deal more to consider than just the title, the compensation and the prestige when evaluating the next step in your career.  Specifically, does the role entail realistic expectations?

Talk about situations in which realistic expectations are not exactly the norm.  Turning around the massive, floundering ship that is GM while satisfying the UAW and answering to the federal government, or meeting the incredibly lofty expectations of the Notre Dame football fans and alumni, NBC and every sports talk radio host in North America.  Certainly some tall orders.  While we all embrace challenges and thrive in the face of adversity, the realist must consider what is truly expected relative to what is truly achievable.  While we all have goals, make no mistake that in any situation there are other stakeholders and shareholders who influence and often set expectations regardless of how based in reality they or their expectations might be.  In the end they will determine your fate.

The corollary to the above is that as a leader you have to not only evaluate if you have realistic expectations set for you, but are you setting realistic expectations for your team and organization?  Ensuring you are putting yourself in a viable position for  professional success is critical.  Ensuring you have put others in viable situations with realistic expectations is equally important.  In the end, how can you attract and retain the best talent if you have set unrealistic expectations for their performance.

Lofty goals are wonderful. However, lofty AND achievable goals are mandatory. If expectations are not based in reality, success will never be achieved.  And just as success breeds success, so to the momentum of failure breeds its own sense of inevitability in an organiztion.  Fair or not, morale on all levels is undercut by the perception of failure.  Setting yourself or others up for failure by having unrealistic expectations is just plain silly.

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On Recruiters…Or Rather Headhunters

Finbar Taggit – the nom de plume of an anonymous former multi-billion dollar Hedge Fund Manager in the UK.   Over the last few years he has gained a healthy following and degree of celebrity in the world of finance for his unique, insightful, and brutally honest postings at http://www.fintag.com  Recently he shared some thoughts on recruiters, or rather headhunters, and of course it struck a chord.

The best thing I could think to do was share his thoughts directly.  Though it is written with a UK bias and there are some small items that do not translate seamlessly, the theme comes through loud and clear.

Recruitment. http://www.fintag.com/archive/2009/10/02/

Many of my friends are headhunters but it is time to out them as devils in skirts. Many commentators have picked up my rantings over the years about who and what caused the crash, you know the usual suspects: CRA, Private Equity, short term bankers, Excel etc but a group I have never talked about are still a menace to society.

Headhunters. These people promote fear and loathing and force employers to shake like spoiled children who cave in too easily to their demands. Lowly accountants are propelled into jobs that are way above there mental capacity and PhD’ers who are more suited to hiding in Labs are given hundreds of millions of dollars to play around with. MBA’s are asked to run huge marketing campaigns and History graduates learn how to structure complex products. Headhunters put out that X bank has people making more money than Y bank and play out bidding wars. They take 35% of the first years comp and push up prices. They create their own markets and control the people who run banks.

So there you have it – a little English style commentary on headhunters, the economic turmoil and events of the last 18 months.  To lay all the blame at the feet of the headhunter, while a dubious honor, is not entirely accurate.  However, his rantings are not without merit.  Truth be told I had to laugh at the accuracy of much of what he said, for in his overblown statements lies a fair degree of reality.  The real lesson in all of this lies in the use of the title “Recruitment” but writting on the role of the “headhunters”.  Yes, there is a difference between recruiters and headhunters.

Keep Finbar Taggit’s rantings in the back of your mind next time the headhunter rings.  Maybe that seed of doubt they plant, that idea of taking the next step in your career, the pitch for the “great opportunity” is playing to your ego…just a little.

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