Three charts have kept my interest for the past few months.

1.  Corporate profits are at an all-time high

2.  Wages as a percent of the economy are at a low

3.  CEO pay continues to grow

 4.  Workers are more productive, yet wages haven't matched that productivity


Given the combination of the above, I make the following modest proposal to address the above issues:

1.  Overall compensation increases for Key Employees and Highly Compensated Employees, as defined by the IRS, will be capped...UNTIL
2.  Compensation increases for the rest of the employees averages 5%.
3.  Thereafter, the cap is removed.

A simple enough example:
a) It would take $500,000 to raise the compensation of the bottom 92% of employees by 5%
b) The top 8% could not see their overall compensation raised by more than a total of $500,000 until part a is reached.

RATIONALE
1.  If you want to pay exorbitant amounts of money to your top level people, go wild....as long as most employees see some gain from the success of the organization
2.  By averaging compensation at 5% for lower-level employees, it provides flexibility to recognize high performing employees.

The afternoon session of Transform HR kicked off with Tim Sackett discussing "What You Wished HR Would Do."  Sackett first highlights his several trips flying on a corporate jet with his CEO; it gave him a new way of thing about things.  Some of the points noted were:

• CEOs want to see metrics that lead to a course of action
• HR pros need to take off the HR Hat, collaborate, and understand the business
• HR need to be creative as traditional HR forecasting is not effective
• HR should hire out of their comfort zone; get people that "scare the crap out of you."
• People perform at different levels, don't be afraid to treat them differently
• CEOs want to have HR develop a true talent mindset; it is the source of competitive advantage for the organization
• HR needs to treat CEOs like any other person in the organization; don't be afraid to meet with them and just talk; CEOs carry heavy stress, and this can serve as a relaxer
• HR should be prepared to have a 15 minute conversation with the CEO at any time

Kimberly Roden tackled the ever popular topic of appraisal in her session, "Performance Reviews: Why They Do More Harm Then Good."  Roden argues that humans are too complex to fit in to a simple 5-item Likert Scale.  Initative, for example, can't be categorized easily.   Appraisal, she notes, needs to be a verb, and not a noun.  It needs to be ongoing.

Roden argues that the appraisal process if fraught with error.   Managers are often subject to the halo error and sins of recency that can diminish the validity of the process.  Similarly, it is often misused, such as being a source for termination.

As an alternative, HR should go back to SMART goals.  It should be a process, not a project.  Further, managers should use technology based on goals to remove subjectivity.   People need feedback often, not just when they screw up.

Roden struck a nerve with the audience by proclaiming that raises are often based, not on budget, but on budgeting.  Given the different cycles, raises may be granted months ahead of the actual review.

In the end, how do we change the culture of review?  Can we change it like a diet, as if we are on Weight Watchers?

Coming up next is a panel on social media in the workplace - Where is it today, where is it going tomorrow?

If you are not in attendance, you may follow the conference on Twitter at #TransformHR or follow it live where it is streaming at http://transform.tlnt.com/2012/live/