Totally Rewarding Chats | Ep. 43: Annual Incentive plans

[00:00:00] All right, another Totally Rewarding Chats coming at you. How's it going, Mr. Reimann? It's going. It's summer. It's, you know, to date and timestamp or Mid-World Cup, right? It's an exciting time, although maybe a disappointing one, depending on what country you're from. Oh, yeah. I think when this comes out, it's probably a week or two. Actually, this is kind of one of those weird things. We're recording here and even if it's a week or two, like two weeks, it'll be too late.

[00:00:30] A lot changes. A lot changes. Your team might be in as we are recording and it might not be by the time you listen to it. Well, I'm historically a, my dad was born in Austria, so I'm excited when they make it. And the fact that they scored any goals was like a W. But being from there, historically, the German team sucking was not. Not on your card? Yeah, that was not what I'd hoped for.

[00:00:55] Sure. And your, your Brazilian Guana providers are disappointed. Like I actually am sensing a trend here. Any team connected to Sean is not performing well in the. Yeah. Can we tie this later to when Susan starts talking? We'll talk to incentives and performance. I should be getting, I don't, I'm, I'm never in the conversation about incentives. That's right. Because that assumes you did some performing as you go. That's great.

[00:01:22] So I am excited to have Susan here. I met her in Nashville and have her on here talk about incentives. But before we get going so that I don't ruin it or, or prove to people that I can't read a LinkedIn profile, I guess. Susan, can you give us your background and, you know, kind of where you're at today and how you got there? Sure. Thank you. Nice to be here. Thanks for inviting me.

[00:01:45] I'm a co-owner of a consulting firm, Wilton Group, which was started in 1994 by Tom Wilton in Massachusetts. And Rhonda Farrington and I took it over and we service mid, midsize companies in all sorts of compensation.

[00:02:06] But prior to that, I was internal, as we call it, and worked at some large companies like Aetna Life and Casualty, a subsidiary of Fidelity. And I worked for General Cinema. Do you remember that movie company? That's now AMC. And that was a family, family-owned company. That was fun.

[00:02:32] So, so that's my background, always in compensation, maybe a little bit in HR, but always in compensation. Okay. And interestingly, when we've spoken before, let's see, in, in the order that you were there, where have you lived? Oh, good. Starting from here, going back.

[00:02:58] Well, that's like, that's like the DUI test. If you have to do the alphabet backwards, isn't it hard to go backwards? All right, I'll start. You pick whichever way is easier. It's more, it's, you have to like choose to, how old do you show you are? If you, if you start from like birth, right? It's like, oh my gosh, all those. I didn't ask for the years. I didn't want to ask for the years.

[00:03:19] Good. I might have to look at my resume. Started in, after graduating from Michigan State with a degree in labor and industrial relations, master's, I followed my husband to Tulsa, Oklahoma. And then we moved to Connecticut, Hartford, Connecticut, where we both worked for Aetna.

[00:03:43] Then we moved to Massachusetts, where I picked up the General Cinema, the Fidelity Connection. And then Wisconsin. So I was, so he's a CHRO type. So he got moved or he took different jobs. So I just. I'm fascinated by the, we have a CHRO and an HR consultant in the same place and how that goes.

[00:04:11] Purely coincidence too, I'm sure. Well, we met at Michigan State. Yes. So then Wisconsin and then New Hampshire and, and then Nashville. So you just like to boomerang back and forth between the Midwest and the Northeast. Yes. Yes. It is an interesting culture change. Yes. So we have the speed round before we dive in. So are you a coffee or tea person? Coffee.

[00:04:41] And then now it's become five and a half questions. If you're coffee, are you a coffee snob? Good coffee. Yeah. Are you a coffee snob or you just like coffee? I'm a coffee snob. I don't like drip coffee. Oh, yeah. Yeah. Okay. Yeah. I would actually, that might be the new line. Actually, if someone says they're a snob, but they like drip coffee. Like really? Yeah. If you don't have a preferred presentation, like why?

[00:05:07] But I did have a Keurig today. I'm visiting my son in Dallas and all he has is a Keurig and I was too lazy to walk to Starbucks. And by the way, you've just reiterated your snob by all he has is a Keurig, to be fair. Like, yeah. It's a yes or no question. Yes or no to manager discretion in the merit process. And you can't do the it depends or but like a consultant wants to. Yes.

[00:05:35] Okay. Okay. You have a weekend away. Let's see if I phrase. I should have you start asking this, Paul. You have a weekend away. No spousal or child units around. So it's your complete choice. Do you go for a posh weekend away or camping in the woods? Posh. Posh. I did that once with my sister. We went to a resort, Miraval. It's up in Western Mass where you live, Sean. And there's one.

[00:06:06] It was like the best weekend ever. To be fair, Paul, I know what it is. They would not let me in. Yeah. If I tried to go there. I can see you already starting to go. That is also not a place you will find me. So if you want to find me in Western Mass, don't start there. Like this. Right. Yeah. Right. We have both ends of the question spectrum between like Sean's house or nearby and like the Sean neighborhood. Yeah. Right. Right. Yeah. Sounds great.

[00:06:35] Best vacation spot you've ever been people should go? Oh, I've been on a lot of great vacations. Many times to Hawaii, which I love Hawaii, but recently Morocco. I love the culture there. And it was just amazing. I recommend it. Um, so I guess side question, rock, uh, you, were you cheering for Morocco? Mm hmm. Yes. Okay.

[00:07:03] Um, and then, uh, are you a crunchy or creamy peanut butter person? Ooh, this is a, can I like give a little more background? I haven't eaten peanut butter for many, many years. Of course. I react to it. I have a reaction, an inflammatory reaction. I assume it's bad. Yeah. No, no, it's not. It's not like allergic. And so, um, I love creamy almond butter. There you go. Oh, okay. That's my favorite.

[00:07:32] I don't know if they make that crunchy or not. They, they, they do make more earthy. So I have a son with a peanut allergy. So now, you know, similar, uh, we have to form our preferences around it. And yeah, some, some sunflower butter, some almond butter, some cashew butters. We've experimented with them all. And almond butter is pretty tasty. But they do make it in a, what did you just call it? Earthy. So there's some that like, they try to emulate like creamy peanut butter, right?

[00:08:00] Like it literally is the same as creamy peanut butter. It's just made with a different nut. And then others, it's just like a natural peanut butter, right? But they make a natural almond butter that has more of a kind of oil and oil separation. But there's no chunks. There's no like chunks of almonds in it, is there? Small bits. Small bits. Not like big chunks. Yeah. So in other words, did they grind up the almonds and put oil in it? And then that's the, what did you call that, Paul? Natural? Earthy. The earthy.

[00:08:30] Or did they add other stuff to it? Yeah. That's right. Yeah. Yep. Awesome. So the reason I wanted to have you on is we'd quickly chatted, but not for long. Um, on sales or not on sales, on incentives. So kind of incentives, but not sales incentives, but the incentive side. And to be fair, we have talked a lot about merit and we've talked sums up, but we haven't really talked about short-term incentives, short-term being a year.

[00:08:57] Um, and so you said that's a soapbox you want to get on and talking about whether it's, you know, you should have discretionary, not discretion, how you move to more structured. So start with kind of the problem you're seeing in the market and then, you know, what you think should be happening. And I'll go with the, actually we could phrase it this way, the consultant blue skies, rainbows and unicorns version. And then the practicality of how your husband might put it into practice in reality. Yeah, that's a good one.

[00:09:26] So, and you know, very large companies have very structured incentive programs. They decide on the corporate goals. If there's cascading going on, how much is individual, how much is the next level up. So my husband has worked for very large companies and that's all structured. They have ways of administering it that are easy and managers know how it works.

[00:09:53] The, um, businesses we work with are smaller, uh, midsize, uh, many, some family owned by shareholders of families or a shareholder or a single or two owners. And they can be 300 million, 500 million, and they're giving out bonuses to everybody.

[00:10:16] Based on, I still remember that person, you know, and I think they did a good job type of thing. So then it becomes unmanageable. And then they say, oh, we need a structured program. So, um, that one of the first issues is the pay opportunity to deal with. You would think the measures, but it's really the pay opportunity, which is if you try to,

[00:10:42] um, cluster job, uh, people in, in the jobs, because of course they think of them as people. These are the types of companies where you have to put the person's name next to the title, because otherwise they're like, is that so-and-so, you know? So, um, uh, you cluster them together into, into levels that when you go to implement the plan,

[00:11:04] you're able to say, if you want to be transparent, this level of job has this opportunity and this level of job has that opportunity. Well, when you do that, what you find is, as you strive to put together something that's a little market-based, a little affordability issue, is you got people who are in these jobs in a category,

[00:11:29] some were paid very little on a discretionary basis, and some were paid a lot more. And so, um, so that's problem number one there. Uh, you also have offer letters with guaranteed bonuses in them. Oh, well, we have to, like, put them aside. Um, and so that, and then, uh, we total it up and we say, okay, you're going to be spending,

[00:11:54] instead of a million dollars now, based on what we think's affordable and these levels, at Target, you're going to pay something like a million five. And the CFO says, uh, let's see, how am I going to budget that? And so that, I would say, is one of the hardest, uh, pieces there is the transition and helping them think about short-term and long-term.

[00:12:20] One of our clients, we have a, um, a discretionary adjustment in there. So we're talking about discretion. So we have a more formal set of measures and, and goals. But, um, if somebody was in this group that really was paid more before, over the first year, we encouraged them to have a transitional ability to do an adjustment, a discretionary adjustment to pay more. Never pay less, but always pay more.

[00:12:49] Um, so that, I think, is one of the hardest, uh, pieces. And then, of course, comes the measures, uh, would be the second more challenging. Do you have a question? Do you want me to stop for a second on the opportunity or keep going? No, no, let's, let's see where you go. I mean, I have questions. Uh, it would be rare if I don't have questions, but, um, for sure. Yeah. Keep, keep going. Cause I've just been jotting my questions down as we go. Okay.

[00:13:16] And then on the measures is going to be for the first year. Well, of course, the company ability to pay is going to be everything. Are we going to have a profitable year? Do we have enough to fund the plan? In the first year, are we going to just use a company, company measures? Cause then we know there's a direct tie. Or are we going to try to bring down the line of sight into something that is more mega division or department, something along that line.

[00:13:44] Um, so that is, um, uh, the first part, they come up with some ideas in the beginning, but towards the end, things are changing. Like, uh, we went to go implement one and they totally changed the formula on what calculates for the company amount. So, um, so those, those things. Uh, and so in the first year, they do tend to be more high level.

[00:14:12] Um, but then they're like, yeah, but what about individual? And this is where some jobs are easy to measure and other jobs. My, my favorite one from 20 years ago is how do you measure the receptionist? They don't have receptionists anymore. How do you measure the receptionist on what is their line of sight? And what's the difference between that and their merit increase, uh, type of thing. Yeah. So those are the two big, big challenges, I think.

[00:14:42] Are you seeing more companies? Because I think the trend to making it measurable and then, you know, the impact is the big question, right? And so are you seeing more companies, which is kind of what we're seeing, basically have a higher percentage of company index inside the short-term incentive, higher in the organization. And when you get to the, you know, whatever, you know, marketing coordinator, they might have, you know, 10% company, 90% individual, because they're theoretically not driving the

[00:15:10] top line the same or responsible the same. Although I argue that's who usually is actually making the company go, just the person down on the ground. But, but like, are you seeing more companies kind of have that dispersion in their short-term incentives? Yes. I would say that if we can get past the first two things, they totally understand how measures should be weighted. So yes, I, I agree.

[00:15:34] One other thing though, you asked earlier as you were setting this up is about, um, where, I forget how you asked the question, but there are issues where companies have implemented a more structured plan. And then if it's not quite either implemented in terms of training or some people come in at the higher level and they're like, this, this is a lot of administration.

[00:16:04] Now, if I hear that now, I'm just like, come on, in these days, it's a lot of administration. I mean, it used to be that if I wanted to find a platform to do all the work, it was like some ridiculous amount of money per employee per month. Now it would be like, it's so inexpensive, but coming up with, I think they struggle with,

[00:16:28] okay, um, we're not still not quite in the mode to set the targets on the measures or, you know, this is a lot of work. So some, I am seeing that some are saying, uh, I think we're just going to do something simple for a couple of years and, and, and put it aside. And, uh, this was a very interesting one.

[00:16:51] I saw a nine box, a corporate funded plan with a nine box results, um, on how well you are using and adapting to AI, everybody on the same thing, the whole company. I don't know how, uh, now I've only seen that once, but maybe that's going to be the key thing these days. How do you measure that? It's like a whole perception of how do you measure using AI through a vendor, through myself? Yeah.

[00:17:20] Am I using it for no good reason? That was going to be my sort of question about the second key challenger on the measurement, right? And it's the, the, is the juice worth the squeeze, right? If I could sort of use that, like so much energy goes into defining measures that in, you know, candidly, I worked at a company that forced smart goals for everybody. And then I found that the measurement of the goal was just as sort of garbage as the goal setting, right? So it's like, I found a way to make sure that my favorite person's metrics, quote unquote,

[00:17:51] you know, exceeded the target so I could get them, you know, so do you feel like it's over-engineered, right? Are we getting what we are putting into it when we invest all this effort in measurement? The AI measurement's sort of a classic example. Like, I feel like you're putting metrics on something that is sort of a finger to the wind to an extent. So I'm just curious your perspective. Like, dude, is it being over-engineered in the pursuit of measurement? Is that part of the problem?

[00:18:18] I think people, it wasn't before, but I think now people are asking the question because everything has to be done quickly and easily and all that. And if you're not set up to do that, or if you're in a culture where, you know, perfect example, silos, which is a corporate culture problem, and you think, oh, this incentive plan, we can have some collaboration.

[00:18:45] We can use the incentive plan to do it. But it's tough. So I want to say that it's going forward in the future. It's going to be interesting to see where it goes because I think it's open to a lot of change that way. The over-engineering or the, I'm right on board with this. I love all these metrics. Like, I've seen people really take, love, I've had one CFO went from one company to another

[00:19:15] and, oh, you have to come in, Susan, and do it here. It's going to be so great. And he loves it. But then you got others that are just not as excited about it. Yeah. Yeah. I mean, we had a few episodes ago, we had James C. churn on. And it got spicy at times as sort of, you know, I think I pushed back in particular because he's an open critiquer.

[00:19:43] That's not the right word, but that's the word that's coming to mind of like, we're just not doing this right. Like, these incentives don't work, right? This isn't what we're after. And as a result, it's a lot of effort with no return. And I'm not ready to go all the way there. I think we're assuming some of the wrong things. But, you know, but that's part of the argument is like the measurement is a control mechanism. People don't collaborate more because you're measuring it, right?

[00:20:10] They don't, it actually stifles the behaviors you're looking for. Stifles the innovation. And like, the example I use a lot is like, because I'm probably, I, you know, you and I should just do one more. Well, I'm a little more where, where probably James is. So from the development standpoint, you know, you have 13 story points every two weeks. And so if you measure output, purely output, you miss like, well, what if I actually can build something that makes us twice as much money with half the work?

[00:20:37] Well, actually I shouldn't do that actually, because you're not going to pay me as much. And you don't know your, your attempt is to read into the future on what measure is going to make sense when you, so you don't allow someone to go create something new because they literally would create something new so that you can make money and they make less. Yeah. And that's generally how humans are driven. I also will throw out there like the other thing that's out there is if you're using performance

[00:21:04] to which you can argue performance tools either suck or it doesn't work or whatever, but you already have the opportunity to talk about someone's performance and then drive that into, like there is a more general number to use in my opinion to say, well, if you're a good performer, this is how your bonus is structured. And this is, that bonus is then based on this percentage of individual based on your score of one through five and the rest is company based. Fine. You know, that's fine.

[00:21:34] So I don't know if you're seeing more of that because I think you're already doing that work. And in my mind, very few people get performance, right? So why don't you just spend the time that you would come up with new measures and actually just do performance, right? And tie that to the bonus. Yeah. Well, that's individual measures, which are difficult too. You know, what you reminded me of is, what is that saying? That whatever you measure, you're going to get more of. So the stifling of the innovation there.

[00:22:03] So in the same way that I work according to my goals and the targets I'm supposed to reach in the same way, if I'm really, you know, given the right challenge on that, I'm going to work hard to get to it. So there's sort of like both sides. One of my favorite ones too was we were doing a designing a sales compensation program many, many years ago for this company.

[00:22:30] And the head of HR had a target. One of his goals was to complete sales compensation on time. You know how they were always late? Everything runs late, like past the end to the... Get the plans out on January 1st, right? The classic edict. Yeah. So anyways, there was all sorts of things that happened and went on during this three month process. And all of a sudden, the company let everybody know that they didn't make enough money to

[00:23:00] fund any bonuses this year. Guess what? That plan was not done on time. Like, well, I'm not going to get a bonus. So I'm not going to push it. I'm not going to kill myself trying to hit that date. So yeah, there's all sorts of bad behavior and good behavior that you can get from that. How complicated do you make them, Susan? Because one of the other pieces, you talked about having different departments and, you know, the tech, Excel, whatever, can now manage a lot of this.

[00:23:29] So, you know, there is this weird thing if you have a company with multiple divisions. Do you fund the bonus pool by division? Do you fund an overall company? What is the metric? Because I've been somewhere where you're having a great year, but other departments are having a bad year. And they're like, well, actually, it's based on the whole company performance. And you're like, you know, Paul is going to sit back and be like, we crushed it. Why am I getting the same as Sean? He's awful over there. Like his team's doing awful.

[00:23:56] So how do you like, do you suggest they try to be a little more complicated and do it by division, by department, or how do you suggest they allocate the company-wide? The company goal to me is always interesting because they're less at the bottom because you don't drive. Everyone always says the CEO is 95 or 100 percent and the, you know, the administrative assistant is 95-5. And you're like, I get that. But what about the cat who's 50-50? Right. Who's half old through and the company doesn't make it, but they crushed it. Yeah.

[00:24:26] So those are a couple of things to throw at you. How are you guiding companies to handle that part of STI? Because the bonus pool, it's the bonus pool. It's funded and it's not contractually obligated. Mm-hmm. Yeah. I think I've seen many, we had a client that had several divisions and they purposely put businesses together that are going to have help one division cover the other.

[00:24:54] In other words, they don't have like four different lines of business that all track the same, all doing great, all doing worse. They purposely do that so the company stays afloat, right? Or so they succeed. And so it does, I even at Etna, when I was there, the merit process was based on the division, how the division did. This was a really long time ago. So that would cause a lot of angst.

[00:25:21] But I think there it is in the waiting is what it is. But it also requires a lot of communication. Like during COVID, people threw out their plans a lot of times. They either underestimated that they were going to get the windfall or that they couldn't keep you know, to their plans. And you hear, heard a lot of that on public company executives around how they had to really use discretion.

[00:25:51] They didn't, you know, they didn't hit their circuit breaker and things like that. Or they threw out their performance management program. That was another one for a year or so. So I don't know. Did I answer your question that way? I think I just in the waiting. Yeah. Yeah, I think how they're doing that. But the waiting, it's always interesting to me how stuff gets weighted throughout. And then, you know, at a high level, you talked about communications too. So how do you communicate the waiting?

[00:26:20] And then I always think the interesting part is like, Paul shared me say it, like the people strategy of the company is not usually to hire stupid people. So how do you communicate to them? Because the natural question is like, well, where does the money come for this magic bonus pool? Does it from the magic money tree? Or like, what's the formula that it gets there? And what are the rules of engagement for that bonus pool being taken away? Because the real answer is, if the CFO wants it, he'll take it. Or if the board wants it.

[00:26:50] So, you know, how do you, how have you seen companies use best practices to communicate an STI program? Because I actually find that to be the hardest one because LTI has got rules. And so you kind of can't, you got to stay within the rules of what you can offer people and stuff, right? It may not be fun to read, like, go check out the 409A thing. Someone's like, I'm not reading that. But, and then merit, it's very individual. So it's very personal and you've got control. And in theory, they blame the person or it's very close.

[00:27:19] But this whole, like, how the company does or how my division does. And I did well. And where's the magic money come from? How do you see people communicating that effectively? I've seen a lot of ineffective ways. You reminded me of one other thing before I answered that, which is in private companies, sole owners, they won't share the financials. I know.

[00:27:43] So they use a year over year increase percent in type of thing, right? So my feeling on best practice is we, since the beginning, we love scorecards that where everyone gets their own one. So they know exactly what the, what the, what's the targets are and gets quarterly communications on how things are going.

[00:28:12] It's kind of like we give the example of, it's kind of like kids playing a baseball game, you know, when they don't keep score and everyone thought they won at the end. Like, that's what a lot of incentive plans feel like until you do and give them what we call some sort of calculator or some platform or something that tells them what the goals are. They can put in how things are going or that's populated for them.

[00:28:40] There's a written, you talked about, Sean, the legal, there's usually a legal document with long-term incentive. Well, we do a similar document, not legalese. That's a narrative that explains how it works. So those are, I think, a good practice that we've seen work. And, you know, we hope that after they've done it and we haven't heard from them for a while,

[00:29:07] like, did you actually, like, communicate the second year? And how did you do that type of thing? But yes, with anything, I think the transparency is so important. And the regular communications are as important. The only thing I'm going to push back on, anytime parents think that they're not keeping score, who's not keeping score is the parents. The kids are all keeping score. I don't care who you are. Those kids are. Let me extend that.

[00:29:36] And I would extend that analogy to here. Now, here's the thing. So, Sean, your kids, your kids were high achievers. You're an athlete, right? Like, I come from a different end of the sort of athletic tree, right? Like, we participate, but we don't necessarily, you know, succeed all the time. But if I actually want to – it's a slight redirect using the same metaphor, right? So, I agree. Like, you don't keep score. You know, maybe they're keeping score. My observation is having coached youth teams, and I think there's a parallel here into the corporate world

[00:30:06] and a question for you, Susan, which is the kids that want to do well are still going to try and do well, right? My son actually doesn't know the score because he's kind of oblivious about it, but he still tries to hit that home run at every at-bat. When the ball comes his way, he absolutely wants to pick up the grounder and throw it to first, right? Like, he does all the things to succeed, even though there is zero incentive for him to succeed. So, there's kind of my hot take question, which is, do we think this actually – like, is it really an incentive, right?

[00:30:35] Or to some extent, is it just there to reinforce the behaviors we were likely to get anyway? Hmm. I like that. I'm thinking on that, Susan. I'll add to that. Like, if it's not incentive, does it become what I think is worse, an expectation? Yes. Because the expectation changes and the bonus pool doesn't get funded, and they're like, how is this my problem? I expected and planned for that. Yeah. Yes.

[00:31:02] I think those are great questions, and they all happen. When I was at a large company, it was expected that you get 85% of your maximum or whatever. They called it a target. And so, yes, if you don't communicate, then there is that expectation.

[00:31:26] The incentive, I think, is a market thing, a compensation thing, right? Which is, you change, you get a new job. And before you had a 15% incentive and such and such bonus. And now they say to you, well, we only have 10% for your job. But we'll make your total cash the same.

[00:31:51] We're like, wow, that's pretty good because your incentive is supposed to be at risk. You shouldn't be, like, converting what you could make a target, right, into the base. But I think it's very much a market thing or a status thing. It's like becoming from non-exempt to exempt. Like, oh, I'm exempt now, right? I don't want to be non-exempt. I don't want to be an entry-level non-exempt. In some way, it's a status thing, right? One last thing, though.

[00:32:21] Which I think is one of the dumbest things ever, by the way. I'll just comment. I wick. I thought I was so cool when I was a developer and moved to exempt status. What a dumbass I was. I should have been paid by it because I think my hourly wage was a dollar by the time I was done. It's funny how it is. Like, you're right. It's a status thing. Yeah.

[00:32:45] And I think we're talking a lot about sort of, you know, corporate people or support professional people. But hourly people, I forgot to mention that. We've done some of that. And we did a study, like research. This was before we had the Internet, but we had other stuff, around behavioral studies that were done on hourly employees.

[00:33:12] Now, an hourly employee could be a nurse, a highly paid nurse, to a picker off assembly line. And how much that motivates. And what we found in the analysis that was done then was, I think that was the early 2000s, was that for hourly employees, they'd rather have their money in their check rather than wait for a bonus. Yeah.

[00:33:38] And you have to pay at least two weeks' pay and a bonus for it to be reasonable, you know, to be acceptable that way. And whatever you do decide to pay as a bonus, you don't have to pay a lot, just enough to be competitive. So that was super interesting around the whole hourly piece. But we also had a client who had issues where they ran, you know, a 24-hour assembly line.

[00:34:08] And the work was hot in hot areas in Texas. And so what they did, instead of really using the – they decided not to make the – they kept the performance management more like a step increase type of thing. Except if you had really bad performance, no increase. And instead, they put some key things that were important in the bonus plan. And they created a quarterly bonus. Well, they – we all did.

[00:34:38] So basically, it, you know, was things like attendance, safety, those things. And there were descriptions. So a level one was this description, a level five was that description. And it – and so that was a very interesting way to use the incentive. So I'll have one more question at Cognizant of Time. Do you see the timing changing over the – over a period?

[00:35:06] So annual incentives were kind of a thing that, you know, started a long time ago when people stayed 7, 10, 12, 15 years in a job. Are you seeing or having people start thinking about, well, if it's an incentive based on productivity and other stuff, doing monthly, you know, longest quarterly type of things. And that might be different for Paul who's maybe project-based in consulting. I might be on development drops somewhere.

[00:35:34] Like are you seeing people move to incentives that way? Are you seeing a lot of people still sticking to the earliest quarterly and more annual based? Yeah. I think annual and more at work data supports that is most common. But I think there is a situation where something different is appropriate, project quarterly.

[00:35:58] My husband worked for a company that the executive team was on a quarterly because of the challenges they were facing. So they did. In the quarter, they did. And they paid enough. You have to pay enough, too, to pay more often. So you can't take a $5,000 bonus, divide by four, take taxes out, and call that meaningful. Doesn't math. No.

[00:36:28] So you have to pay enough in order to pay more often. The only thing I'll push back, I mean, other than the legality of that, is when you pay a large, well, if it's outside the legal bounds, is when you pay annually, you have this outflux of employees. You saw a lot of consultancies because you're like, sure, I'll retain until I get that bonus. And the next bonus is now 12 months out.

[00:37:07] Yeah. Yeah. And then you have bonus because it's there. So I think timing, like, I think it's complicated based on your role of supply and demand and other things. But I do think companies are going to move to more frequency or project-based because otherwise you're like, if I do a really good job on this project, does it really matter? Because bonus is 10 months away. I'll just do well on the next project. Yeah. Versus, like, the faster I work at this, the faster I get this done if it's tied to business. Yeah.

[00:37:32] We did have one client now who wanted to do it based on they have buyers who they sell things. They're a retailer. They sell things so it could be seasonal around when that season closes and on certain types of things. So they wanted to have that bonus payout right after everything was calculated for those groups of people. It wasn't a lot of people.

[00:38:00] And in the end, they said, too complicated. So it's – and they're paying everyone the same time. Yeah. I do – I am worried, like, as we get towards the end. Like, I am worried the – like James basically said, coming back to that. Like, can we and should we are two different questions around there.

[00:38:23] And then how do you make it kind of team-focused versus, you know, the analogy I use all the time is everyone during high school or college was on a group project. And if you were on the group project that everyone did equal work, please raise your hand because that, like, never happens. So I do think, like, how do you weigh all that? So I do think – I think it's great you came on. Like, it's complicated.

[00:38:46] And honestly, of base pay, LTI, and STI, you are more likely to hear me say the dreaded it depends around STI than any of the others. Yeah. It's different for sure. Yeah.

[00:39:01] I think that's a good thing to say that every business, startup, mature, large, small, ownership type – forget, you know, private equity. That's like another whole thing. So they're all different. And you want to do something that works. You just can't copy a program from one to the other. That wasn't always – when I was internal, that was always one of the things that drove me crazy.

[00:39:31] Someone new would come in and say, well, we did this at our last company and this will work here. And I'm like, what company did you work for? I don't think so. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah.

[00:40:08] So the – this has been great.

[00:40:38] business. You know, a lot of them say, oh, we have a seat at the table or we're business-oriented. But not everybody. So I think that's important. And not every company – what comes first, the chicken or the egg? If the HR team is putting the business first and really asking those questions, does that make the ownership or whoever's running the company involve them correctly?

[00:41:04] Or does it take the senior people, the ownership, to leave it open for HR to be more involved in the business? I think that's a question. I think that's going to be – I'll double down on that because I think the science behind the roles and total rewards are going to be easier. But the art, to your point, applying it back, and it's going to require the art and knowledge to apply the art in the business. Yeah. This has been awesome.

[00:41:31] I'm going to say, Paul, I have not – what I've not said in a long time we haven't done is make sure people click the follow and like button. I have been reprimanded by others that I don't say that. And now I feel like a true podcaster that I'm saying, you know, hit that like button or follow us. So evidently that matters. Paul and I obviously are more interested in talking to cool people than we are on followers because someone's like, you don't ever do that. So make sure people follow.

[00:42:00] We will put Susan's contact information in there so people can find her. She's obviously super knowledgeable about this, especially if you're in that place where you're trying to move from just discretionary doling out money to put wrapping something formulaic around it. I really appreciate you coming on, Susan. That was great. I really appreciate it. My pleasure. Thank you. I guess you too, Paul. Thanks for showing up. Yeah, you deal with me one more time. Thank you, Susan. Thank you, Susan. Thank you.