The Organizational Pay System - Principle versus Practice - A Wide Chasm

It is my contention, after spending almost forty years in the pay management business, that most organizational pay systems although fairly well intended are mostly mythical beasts that in practice suffer from implementation malaise.

Internal equity is a stated core objective of any pay system. Internal equity means that within the organization the intention is to pay employees according some logic based on the work being done and the value of that work to the specific organization. Well this a valuing system. And as such it is quite subjective and is thus fraught with confusion and mistrust. Systems and structures used to achieve internal equity principle do not necessarily reduce the subjectivity. Rather these systems are at best rational and cannot be scientific. Human judgment and biases do play a big role in the distortion process. This is one area where the chasm between theory and practice is wide. The stated pay system principle that is often widely adopted is pay for performance. Although well intentioned, in practice this principle rarely achieves its stated purpose. This is because here again human judgment with all its biases quite often raises its ugly head.

The principle of market competitiveness is an important structural principle of a pay system. But suffice it to say, here again gathering and validating believable market data for their use in pay systems is always questioned in both the positive and negative directions, if the data does not say what the recipient wants to hear.

Special interest thinking dominates the pay ethos thus creating all kinds of aberrations in the pay system. Executive Pay, allowances, perks, equity plans, adders, differentials all tend to create a great deal of confusion and controversy and as such widening the chasm between principle and practice.

Another widely sustained principle in pay systems is variable pay, as formulated through bonus and incentive arrangements. Although in principle this is very sound thinking but in practice the system wilts under the pressure of management discretion and the realities of continuing talent management challenges.

Then there is the deep chasm created between the principle and the practice of equity compensation. Sharing ownership with managers and employees is a noble principle of effective reward management. But that principle suffers from the vagaries involved in the actual practice and operation of these plans.

Thus I want to end this essay with a quote from one of favorite books (People Specialists - author Stan Herman - unfortunately the book is out of print). In this quote the author very appropriately explains what one can expect from pay systems after all:

“The point is that there are some things that compensation administration can be expected to do and other things that it cannot. It can help establish a limited and transient orderliness in the way people get paid. It cannot structure a sublime and everlasting order where everybody’s pay is self-evidently equitable and proper in comparison to everybody else’s pay."

"The quest for a neat correlation between work and reward is a natural one which fits nicely with most people’s idea of the way things ought to be. But the fact that they ought to be does not mean they are. Money value determinations are not the products of fine, dispassionate measurements made in the dust-free, dehumidified atmosphere of a laboratory. Rather they are continually buffeted and re-buffeted in the turbulent environment of the messy outside world, and not merely on a supply and demand basis, either.”

But all is not lost there is very new thinking as to how to really mitigate the chasm and create greater harmony between principle and practice in pay systems. 

The Two Main Pillars of Compensation Systems

There are two main pillars around which most Compensation Systems or Structures are based. And they are:

Internal equity and External Competitiveness.

I will first introduce the concept of internal equity and then over the next few posts I will raise various issues and concerns about how in practice this concept is misused and distorted thus resulting in many continuing problems and challenges.

In order to achieve internal equity companies should go through a process. The components of these processes are: 1) Job analysis, 2) Job description writing, 3) Job evaluation resulting in a classification system or job rankings, 4) and finally the end product being a job structure. This resulting in a job structure is supposed to achieve the admirable goal of   internal equity.

But does it?  I do not think so. 

Over the next few posts I will be discussing in detail some theory based underpinnings of the internal equity concept. But, on the other hand I will also present thoughts and opinions about the misuses of the internal equity concept.

The Basics

There are only four ways to pay people.

First, we can pay for the job a business or a company hires people for.

Second, we can pay for the skill possessed by the people who are hired.

Third, one can pay people the market going rate for the job or the position they hold.

Fourth, it can be a combination of the first three.

Thus, first and foremost a company or an organization needs to determine is which path they are going go down. Having said this quite often managers and executives criticize the pay system without having either understood or without determining strategically how they want pay their people based on the structure of the work execution portion of their business plans. Outside consultants come in and set about structuring pay systems without answering this first base question. In my consulting practice, I have often asked CEO clients what they want to pay their people for, based the four questions stated above, and they have no clue. They just want some kind of a structure. Or they say do not implement this or that program. This feeling being based on their past experiences. But they have no clue fundamentally how they should pay their people based on the strategic organizational requirements. So quite often the "suit is borrowed off the rack" and things do not work. People put in "the Hay System" or some other system. This then results in universal angst. They “cut immediately instead of measuring twice before” - the carpenter's rule.

Pay, I say is a lagging variable not a leading one. Don't blame the pay system for all the ills in the organization. Recruit the "right" people, for the "right" job at the "right" time first and then determine the best pay package for them.

So, borrowing from Steve Covey I say, "begin with the end in mind".

Why I Use The Word "Ethos" In This Blog

Since I started writing this blog many people have asked me why I use this word "ethos" in the context of "work". So here is the answer.

—Ethos forms the root of ethikos (ἠθικός), meaning "moral, showing moral character". To the Greeks ancient and modern, the meaning is simply "the state of being", the inner source, the soul, the mind, and the original essence, that shapes and forms a person or animal (from wikipedia).

  

Ethos, according to The Oxford English Dictionary, is defined as "the characteristic spirit, prevalent tone of sentiment, of a people or community. Originally the word has its roots in the Greek word 'etho' or "to be accustomed to.”  It refers to accepted standards, rather than what is more modernly thought of as character unique to a certain individual. The word also means  ‘'a habitual gathering place” - a place where one might gather often, the opportunity for developing communal or common values. These types of values are those, which are established in the meaning of ethos.

Thus I find the word appropriate in the work context. Why, because —work in our lives is all encompassing. It affects our economic, sociological, cultural, environmental, psychological, familial, physiological, emotional and spiritual lives and more. Thus understanding the concept of work and how to manage the administration of work systems requires an understanding of the words used, the theories, the issues, the principles – the context - the ethos!  Our work livelihoods require us to be loyal/disloyal, committed/not committed, respectful/disrespectful, dedicated/not dedicated, motivated/not motivated and on and on. Every single human emotion! It almost touches our souls.  Thus our Ethos!  Thus the use of the word!  

Pay Knowledge = Pay Satisfaction

Many years ago when I read Dr. Ed. Lawler's book "Pay and Organizational Development" I had discovered this research based theoretical construct. Ever sine then I have seen the validity of this concept in real life.

The more employees know about their pay - how the pay determination process works and how the individual pay decision that affects them were made, the more satisfied with pay the employee will be. Transparency with everything about pay is a crucial step in the effective design of pay systems. The more secret the pay system is the more ineffective it will be.

This is simply because employees are not necessarily concerned about what they get paid but with how their pay decision was made. They judge the "fairness", the "appropriateness" and the "simplicity" of the pay system more than anything else.

Researchers have found that there is a direct correlation between pay knowledge and pay satisfaction. The more staff knows about how pay is set and how they can improve their pay level, the happier they are with their pay, job & level. It has been determined that pay processes are often not well understood by employees and managers. Researchers have found that employees are more satisfied with the amount of their compensation than with the process used to determine it. Also note that pay knowledge and performance management knowledge is positively associated with organizational effectiveness. In many firms, pay is a guarded topic, but those companies who shared information with their employees found that openness yielded high returns in retention, commitment and trust in management.

Thus "pay secrecy" needs to be eliminated if the system is going to be an effective one. 

Thus the key I have found is open communication about everything about the organization's pay system.

The Concept of "Fair Wages"

This is a concept that needs a great deal of contemplation!

I am sure there are many of us who cannot quite determine how we get paid and that certainly results in disconcerted feelings of unfairness.

Hopefully this essay will provide some food for thought in understanding the causes of these feelings.

Let it be known that global pay systems are usually based on three principles; 1) paying for the job - this is the traditional pay system with salary grades, classifications and pay ranges, and other obfuscations, 2) paying for skills - this system pays for now what are called competencies which days gone by were called knowledge, skills and abilities; you get paid whether you actually contribute or not, 3) paying on the basis of purely the market. Find out what your organization's pay system is all about within the context given above. If an organization pays for the job, more often than not this organization is traditional, rigid and bureaucratic. Paying for skills, knowledge or competency is actually great, but there is a certification process involved, and this system requires a lot of administration. Paying on the basis of purely the market is the most equitable methodology because it focuses the pay system directly into the economic dimensions of employment. Such a system requires that your organization have access to market data and that the data is believable and acceptable. In addition to the methodologies to determine base - or what I call "come to work pay" - there are merit systems that pay incremental increases to cover the "cost of living" and job performance as laid out by senior management. Other types of programs include bonuses, cash profit sharing and long-term cash bonuses, milestone bonuses and employee referral payments.  Then there is stock or other equity related compensation programs for some or all employees. This is also a good practice and in the dotcom era made a lot of employees millionaires. Greed motivated executives take home astronomical sums of money courtesy of these equity-based programs. All of these are organizational behavior scenarios, which one can learn to navigate through. But whether you are paid equitably or not is quite subjective and it depends on your concept of "felt fair pay". So compare your pay with others in a similar position within your company or with others in other companies holding similar positions as you and then you can determine whether you are paid fairly or not. Fairness also depends on whether you understand the processes and methods to determine your starting pay or even when an organization doles out annual increases or bonuses or any other compensation scheme. Fairness depends on what, how and why you are paid. Research evidence shows that if employees do not know the what, how and why of their pay system as it relates to them then the employee' pay perception does not equate fairness.

—Akerlof and Yellen (1990), building on work from psychology, sociology, and personnel management, introduce “the fair wage-effort hypothesis”, which states that workers form a notion of the fair wage, and if the actual wage is lower, withdraw effort in proportion, so that, depending on the wage-effort elasticity and the costs to the firm of shirking, the fair wage may form a key part of the wage bargain.

—A crucial point (as noted in Akerlof 1982) is that notions of fairness depend on the status quo and other reference points.  — —Experiments (Fehr and Schmidt 2000) and surveys (Kahneman, Knetsch and Thaler 1986) indicate that people have clear notions of fairness based on particular reference points (disagreements can arise in the choice of reference point) — —thus, for example firms who raise prices or lower wages to take advantage of increased demand or increased labor supply are frequently perceived as acting unfairly, where the same changes are deemed relatively acceptable when the firm makes them due to increased costs (Kahneman et al) — — in other words, in people’s intuitive “naïve accounting” (Rabin 1993), a key role is played by the idea of entitlements embodied in reference points (although as Dufwenberg and Kirchsteiger 2000 point out, there may be informational problems, e.g. for workers in determining what the firm’s profit actually is, given tax avoidance and stock-price considerations).

So in summary whether "fairness" exists in a pay system depends on all the following factors:

1. Whether the various stakeholders understand the pay processes.

2. Fairness is directly correlated to the "secrecy" of the pay system. The more secret the pay system the more unfair is the perception.

3. Also "fairness" depends on an individual's personal comparators or reference points.

4. Finally, recent research shows that "fairness" is part and parcel of how employees perceives the pay system as "appropriate" to the individual's needs.

Thus an organization's pay system needs to devote more time on the employee "demand" side of the pay equation.

Options After MBA

Question: I am a recent MBA graduate from a top rated business school and at this time I am contemplating a career in a company as opposed to joining a consulting firm and pursuing a consulting career. What are your thoughts on this idea?

The answer: This is a great hindsight question for me. This is because I received my MBA in 1969 from a top rated business school and because I have worked in both corporations and the consulting arena during my 40- year professional career.

These are the differences I have experienced:

1. When you join a company right out of a MBA program and you work in Finance, Marketing or Operations, at the outset, you are assigned tactical tasks. Go do this, take care of this and that. You are acting upon direction given to you by your supervisor. You are executing practical hands on stuff.

This can become quite a transition, because in your MBA you were doing analytical stuff, and now all on a sudden, in the workplace you find yourself doing tasks that have been thought out by others. This can be a great advantage for your future career, you learn by doing.

2. Whereas, when you join a consulting company you become an assistant or join a team where you will be asked to analyze stuff, do research, do a lot of data analysis and work as an analytical support person.

Here you continue what you were doing in your MBA program although the work would be much more focused and specific. This type of work has benefits for one's future career.

So, where should one go to, right after MBA? Well it depends on your individual future plans and ambitions. If you like doing things, executing, making things happen then go and directly work for a company, do not worry about what you do, just do it, be the best executor and soon you will see your career flourish.

Do First Things First

In these the most challenging of economic times in modern history, what suggestions do you have to sustain or build a robust career?

The experts in career management will tell you that there are certain universal tips that will facilitate a successful work life:

> Begin with an end in mind. Be clear about where you are going. And then stay focused on that course. Young professionals often tell me, "but I want to try different things before I focus on one career path". I really think that this approach should be modified. Those who very early in the ball game know where they want to go, do better in their careers. Employers like people who are focused. So, now more than ever, one should focus their career aspirations. Develop a specific career plan.

> Start each day with a clear plan of action. Take one day at a time. And with a high level of positivity, try and achieve the day's plan in its entirety.

> Have a non-cluttered work environment. Organize stuff around you. Effective professionals usually have their desks and work environments organized. Use modern technology to organize yourself.

> Do first things first. As Dr. Steve Covey says - do those things that matter most first. Focus first on things that enhance your core values.

> Network and develop professional relationships.

> Develop a personal sense of professional ethics and principles and live by them. Let them be the true beacon of your professional life.

> Finally, achieve a life balance. A truly successful person is not one who has amassed a lot of finances sacrificing other dimensions of life. But a truly successful person is one who quietly has achieved a life balance between one's professional, spiritual, family, health, and community lives. And a successful person is not one who tells others about how great they are, but is one who others say is successful.

Good luck to one and all!

Some thoughts and comments on working in a global cultural setting

With the intensification of global work environments there arises more and more of a need to appreciate the finer differences in the sociological and anthropological dimensions of human behavior as encompassed by the word, culture. Cultural differences encountered, while working with people from different parts of the world, is now almost the main element of career success.

In my opinion the real key here is to understand, that each and every culture has two dimensions - the overt and the covert. Understanding the overt might be easy but understanding the covert requires active listening, acute observation and a great deal of patience. Not necessarily traits that can be developed if nonexistent on an acquired basis. Let us understand the differences between these dimensions.

The overt culture consists of established behavioral patterns that can be explicitly identified and studied, and, hence, are relatively easy to understand.

When we talk about overt or surface culture, we refer to the tangible things that are related to and are unique to an ethnic group. The customs and practices carried out by each unique group become associated with them, when they are mentioned.  In our minds they automatically trigger the cultural nomenclature. Associated with surface culture are the arts, crafts, intellectual achievements, historic events, spirituality and daily living.

The surface or overt layer of culture has the following manifestations - visible expressions, dress code, the work environment, benefits, perks, conversations, work/life balance, titles & job descriptions, organizational structure and relationships.

Covert culture is much more subtle, but regulates one's daily life, more vigorously but unconsciously. Learning how to talk and walk, how to move one's body and make facial expressions, and most of all, how to think and feel, is so deeply ingrained in humans that they are rarely aware of these processes. Certain long- established institutions (e.g., schooling) and daily behaviors are taken for granted.  Every culture has its unique, deep-rooted dimensions that become entrenched in the human brain (Hall 1977).

Thus far more powerful aspects of cultures are invisible. The cultural core is composed of the beliefs, values, standards, paradigms, worldviews, moods, internal conversations, and private conversations of the people that are part of the group. This is the foundation for all actions and decisions within a team, department, or organization.

The covert or invisible core layers of culture are basic values, private conversations (with self or confidants), invisible rules, attitudes, beliefs, worldviews, moods and emotions, unconscious interpretations, standards, paradigms and assumptions.

This is what makes global work cultures so very complex. The resulting challenge to the management of global human resources is enormous.

In the light of this, it is worthwhile to review the Hofstede taxonomy:

Hofstede theorized and researched five different cultural dimensions and stated that there are wide differences in both the overt and covert national cultures. Yet in the workplace people from distinctly different cultures have to work together. Now lets consider the Hofstede taxonomy.

Here are Hofstede's five dimensions:

Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests; a given societies level of inequality that is endorsed by its members, as much as by its leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that 'all societies are unequal, but some are more unequal than others'.

Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to which individuals are integrated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and grandparents) who continue protecting them in exchange for unquestioning loyalty. The word 'collectivism' in this sense has no political meaning: it refers to the group, not to the state. Again, the issue addressed by this dimension is an extremely fundamental one, regarding all societies in the world.

Masculinity (MAS) versus its opposite: femininity; refers to the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found. The IBM studies revealed that (a) women's values differ less among societies than men's values; (b) men's values from one country to another contain a dimension from very assertive and competitive and maximally different from women's values on the one side, to modest and caring and similar to women's values on the other. The assertive pole has been called 'masculine' and the modest, caring pole 'feminine'. The women in feminine countries have the same modest, caring values as the men; in the masculine countries they are somewhat assertive and competitive, but not as much as the men, so that these countries show a gap between men's values and women's values.

Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and ambiguity; it ultimately refers to man's search for Truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising and different from the usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; 'there can only be one Truth and we have it'. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. The opposite type, uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions.

Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was found in a study among students in 23 countries around the world, using a questionnaire designed by Chinese scholars It can be said to deal with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one's 'face'. Both the positively and the negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the dimension also applies to countries without a Confucian heritage.

After studying and contemplating the Hofstede thesis what follows is a practical enunciation of five major cultural differences that are universal across global cultures that affect work behavior.

The difference between individual effort and team effort - in many countries because of the scarcity of resources immense competitiveness exists and individual effort and recognition is what is sought. In other countries, because of changing work patterns, collaboration and teamwork and the ability to work together is more valued than individual skill and knowledge. In such cultures one has to impart, cooperate, collaborate, coach and overall look out for the good of the group or organization.

The second major difference is in the subtle communication patterns. In certain countries communication styles are more direct - ask a question and give an answer. In certain other countries from the very childhood people are taught to watch what they say, therefore, not to always tell people what is in their minds. People tell each other what they perceive other people want to hear. In these cultures people convey hidden meanings, avoid confrontation, are extremely polite and do not tell others what their true concerns are. Thus problems are hidden. Activities get conducted in round about ways without going through a direct route. In certain cultures confrontation is regarded as impoliteness. But in other cultures confrontation is organized and celebrated. The Intel culture was built around, "constructive confrontation". Thus in corporate cultures more informal communication opportunities should be created. Formal and informal social gatherings should be encouraged. Long formal work meetings should be avoided. Half the people attending such meetings do not say a word, thus formal meetings are a waste of time. Create dialogue programs, like performance dialogues and not performance appraisals.

The concept of time varies from culture to culture. In certain cultures deadlines, time commitments, delivery on schedule, are not of value. Look at Hofstede's LTO factor. In other cultures being on time is of utmost importance. This element alone causes the most amount of angst in the global workplace. Certain cultures take a longer view of their lives and certain other cultures time is of the essence. Do it now or perish.

In certain parts of the world there are many immediate swings in attitudes, behaviors, wants and desires. In certain other countries people move a slower pace thus creating long-term cycles for most things. In some countries situations are taken philosophically, attributing work situations to the will of the Almighty. Nothing wrong with this, if only one accepts workplace cultural differences. In other parts of the world procrastination is seen as a sign of weakness and disorganization.

The workplace implications of this discourse are many. But awareness and sensitivity to our differences is the first step in devising ways to work in the global environment.

Everyone aspiring to be bigger and greater in the global work arena should first judge for themselves where they stand in these attributes and through a professionally developed (with value-added advise provided a coach)  individual career plan create a work success journey. 

Tough Balancing Act

People ask me what is one of the most important career challenges that a young professional who is in the early stages of his/her career faces and how should one deal with this challenge.

In my opinion one of the most important career challenges that a young professional faces is how they should balance the demands of the work-a-day world with the need to spend quality time with the family.

This challenge is further aggravated considering that these days most families are composed of dual wage earners who are both career focused. The result is a lot of cognitive dissonance in one's life, requiring constant attention and time, which is very scarce during the day, for any professional. Pressures mount as one realizes and feels guilty for not being able to spend enough attention to all aspects of one's life. Often times one finds that too much focus on one of these dimensions can lead to the ruination of the other. Those who put focus on one dimension remain unhappy and are chastised for not paying attention to the dimension they have been ignoring. They know in their heart of hearts that the neglect of one dimension is not deliberate but it is necessitated by the ever-growing pressures of the other dimensions. So how does one cope i.e. specifically how does one have an aggressive career and associated professional growth and at the same time how does one optimally handle the need for quality time with family and friends?

In my opinion, the two do not usually jive, so trying hard to fulfill the responsibilities of all dimensions all the time is a ticket to disaster. Therefore, what works is to find a very sympathetic partner and to look for simple pleasures and quality moments. The trick is not to stress over this inadequacy but to look for positive opportunities to be with the family and to devote the time and energy to one's professional life also. Because I feel, if a young professional is ambitious and finds themselves loosing out on professional success and achievement then the home and family life will suffer, in any case. Those who do well in this regard have a great deal of personal confidence and they find simple pleasures and joys everyday. Early in one's career one should think through this balancing act and how it will impact the way one chooses to live their lives.

One should begin with the end in mind.

Begin With The End In Mind

Can you give us your thoughts as to what is the most effective way to develop a career plan.


The most effective method and the one we use in college classes is the following:


> Start with writing a job description of the current position you are in. If you are starting off in a career, write a job description of the job you will have when you first start working. Use all available reference material to write this description. Consult your local library when you write this description. Concentrate on the knowledge, skills and abilities needed for this job. If you are already in this job, hopefully the needed knowledge, skills and abilities are those that you currently possess. This gives you an idea of your current strengths and weaknesses.


> Now project yourself five years from now and determine what job you will hold at that time. Write a job description of that position. Again concentrate on the knowledge, skills and abilities required for that position. Use all relevant reference material and consult others. And now you are ready to analyze what you need to get there. You have all the data to analyze the gaps in the skills, knowledge and abilities.

> At this time you should start creating a concrete plan to get there i.e. how you are going to fill the KSA gaps. You need to analyze what training, experiences and additional education you will need to land the job you envision, getting ten years from now. You should also analyze what other life dimension impediments might exist to prevent you from getting there. If your spouse or would be partner is in the picture, you have to put that person’s life interests into your equation. You also need to consider your other life interests outside of work - family, community and health. Take these into consideration in doing your "filling the gap" exercise. You need to decide what is important to you and how you are going to merge your various life dimensions into an effective lifestyle.

Certainly along the way these non-professional life issues can affect how you fulfill your professional goals. This exercise can be quite revealing to those who do it with seriousness. Here is a practical way to implement Dr. Steve Covey's second habit - Begin With The End in Mind.

Most People Learn From Their Mistakes

Young people, the best way to learn the lessons of life is to ask those who are older and more experienced than you, as to what mistakes they made in their careers and what lessons can to be derived from those mistakes. This is a different advise paradigm from one that always puts a positive twist to everything by asking people to do this, that or the other unproven methods - or in other words, cook book solutions to life's challenges.

Quite often in the vast realm of "self help" books all you get are statements of what is the "right" path to follow. You are preached at with quick and easy certain number of steps that can be followed to achieve "success nirvana". Authors like Deepak Chopra, Anthony Robbins, Wayne Dwyer, Dale Carnegie, Steven Covey just to name a few (and there are countless others) are writing book after book and giving expensive lectures telling you to follow their steps to success. Do you buy all the hype?

Well, I will tell you what. The person you should carefully listen to, are those people who are in the trenches and are trying to survive in this tough day-to-day world. Listen to the persons who have made mistakes in their lives and are willing to tell you about their most expensive, stupid and serious mistakes. These are the people who will give you valuable insight into the perils of life's real journey- i.e. what to avoid. They will provide you with the real warning signals. Heed and learn from these people.

One such mistake that I made early on in my career is not to have personal financial intelligence, personal financial integrity and thus total financial independence.

What I learnt from my many mistakes on this subject is that I should have saved as much as I could have from every paycheck I earned. The temptation to spend and be subject to the infinite attractions of our consumer society is quite acute. We measure our self-worth with "what" we have by way of material things. We forget that the word consume means to destroy, to squander, and use up. Warren Buffet gives very sound advise to young people by suggesting that one should never get a credit card. You certainly can do without them. Getting a credit card with a balance on it puts you in the hole right away. That hole then gets harder and harder to claw out of. If any of you readers carry credit cards now, gather them all and light a bon fire!

Save for a rainy day and save for your senior years. One should always have a year's salary saved up. I suggest to young professionals to be an aggressive saver and save up to 20% of your paycheck if you can. This can be done with careful planning and a fine tuned execution of the plan. Do not fall into the "get bonus and buy new car" trap!

But most of all save for when you cannot work in your old age. Here you younger professionals need to be very aggressive. And there are many reasons for creating a retirement fund very early on in your professional lives.

Here are some of the reasons:

1. The world population is becoming older and people are living longer so most likely the younger generations will have to deal with a significant portion of their lives where the earning potential will be next to nothing.

There is a corollary to the contention that the world population is becoming older and we are simultaneously seeing a decreasing proportion of those who are younger. The result of these trends will be that more and more people are going to be demanding payouts from their government pension schemes and there will less and less people to pay into the fund. This is a real doomsday scenario!

2. To effectuate a solid retirement (which includes a very early retirement) a young professional needs a three legged stool approach.

The first leg is an aggressive on-going personal savings plan. If you start saving and start saving early the law of compounding comes into play and within about twenty years a significant amount of money piles up for your benefit.

The second leg is, government social security. This I am afraid will get smaller and smaller as time goes by. Most governments around the world have not done a good job as a trustee of the funds that are put aside by most of us to receive retirement assistance when the need arises.

The third leg is, private retirement programs - the defined benefit pension plans and the defined contribution pension plans. We have seen and we will continue to see a rapid decline of defined benefit pension plans and an increase in defined contribution plans - the 401 (k) types of plans.

Thus my advise to young folks in a very direct straight forward manner is that the future of the world is not that secure because of growing populations, increasing diminution of natural resources, scarcity of investment funds, large government deficits, world wide corruption, decreasing education standards, and on and on. So a young professional has no choice but to take the bull by the horns to create a solid financial security plan, for themselves and by themselves.

I suggest the start of the journey is "deferred gratification".

Career Changes In the Wind

 Here is a question:

What in your opinion will be some of the major shifts in careers/jobs as we move through this century?

There are major changes in the winds in this the Internet age. Here are some of the shifts:

1. Concept like career self-sufficiency or career self-reliance now have primary focus. These concepts will be of paramount importance and they suggest people should take responsibility of their own careers.

Gone are the days when you joined and then stayed in an organization for a long time. A life long career in an organization is a thing of the past. You have to consider yourself as self-employed all the time. This is clearly the mind-set that people need to adopt during these tough economic times.

You have to take charge, manage your own career choices and not rely on any single organization for your career aspirations. Self-marketing will be a key skill to learn and develop in the coming years.

2. Behavioral competency as opposed to hard skill and knowledge will become more of a key career determinant. This will be the emphasis as opposed to positions held and companies you worked for. There will be a movement from hard skills to soft skills. People who demonstrate success in a behavioral competency framework will have continued job success and stability. This maybe a result of the softening of the workplace, where effort put in can have equal value as results achieved. Competency based career stability along with career self-reliance will lead to success in managing your own career.

3. Entrepreneurship will also be a sought after career. Working for one's self is far more desirable these days compared to twenty years ago. People who take risks assertively will do well in careers. Risk taking, a self-employed orientation are all highly desirable traits for career success these days.

Then there is the new concept of buying a job. People who remain chronically unemployed can always consider buying a small existing business or a franchise. And if you stay focused on these ventures, then surely there will be career independence and career security. The Internet has created many "At Home" business opportunities. Trust me; running your own business does have many advantages but also many disadvantages. But in the long run with a "stick to it attitude" there is much more success and stability. But you have to develop a daring and risk- taking attitude.

To tell you the truth I for one, if forty years ago had considered running a small business and had stayed focused on it, then at the end of my career I would have been much happier. I have friends who migrated to the US worked as a dishwasher in MacDonald land, saved as much as they could and then became a minor owner of a franchise. They learnt every bit of the business and through government sponsored loans bought franchises and now they manage and own seven or eight franchises. They are happy campers. On the other hand I see people who have worked for others and are under constant pressure to please someone else. They land up becoming physically sick through constant stress exposure.

4. I have observed in my consulting and in house work that because of the uncertainty of the economic times with the persistent threat of down-sizing, lay-offs, restructuring, de-layering, reorganizing, top management changes and what have you (a totally unstable work environment), there is a particular skill one has to develop in order to stay alive. This skill is called organizational politics. I think this competency or skill needs to be learnt as a prerequisite for successful organizational existence. The need to possess this skill has markedly increased in my view in the last fifteen or so years. And now in some organizations this competency is more required than job knowledge and job related skills. I have found this new attribute all over the world.

I advise most readers to read a book on this subject called "End of Work" written by Jeremy Rifkin.

Success In Professional Life

Often people ask me, what in your opinion are the secrets of career success?

I am glad this is a question I am answering in this blog post. I like the question because it is somewhat philosophical. Looking back on my career, which now covers almost forty years. And looking at the associations I have had as a career employee in about ten Fortune 500 companies.  Also from a HR professional's point of view. I feel I can certainly share my perspectives. So here, in order of importance are factors that I think lead to career success.

1. Being specialized in a discipline. If you become the best value adding resource in an organization in one particular area, in my opinion you certainly will have career success. Your employers will look to you as a person who can assist in the organization’s success.

2. Networking is a key element of success. If nobody knows how good you are, then how are you going to achieve success? I tell everybody to network, to meet a wide variety of people continuously and then one can be on the road to success.

3. A balanced life is another ingredient. Just because you work long hours does not mean you are going to be successful. As a matter of fact, if you work long hours, employers might think you are not very efficient. It is important you balance your work, family, spiritual and community dimensions of your life.

4. Being at the right place at the right time is an important factor. If you think you have an excellent opportunity in front of you, grab it. You know what they say, carpe diem! Most of us over analyze the situations we are presented and therefore we miss those rare chances that come in front of us once in a long while. This is an intangible - for us analytical types these opportunities are hard to fathom, because they do not seem rationale to us. Seize the opportunity in front of you, because that very opportunity can be your ticket to “career nirvana”. Instinct, I have learnt can often be a good guide.

5. Career self-reliance is yet another important point. Do not depend on others; be independent. Begin with your end in mind. And steadfastly stay focused on your path. Otherwise you will meander.

6. Do not go through your career being a skin deep professional, be a knee deep professional. If you profess to be a professional in your field, get yourself educated in that field, get yourself certified in that field. Understand that field in great depth. Become a true expert in the subject matter. Do not fake it. A little knowledge and whole lot of "hot air" will succeed in the short run but not in the long run. A little knowledge is always dangerous. I find in recent years there are many so called experts crowding the halls of companies and as such in depressed economic times organizations can easily get rid off a whole bunch of people without a wink. Rarely are in depth professionals subject to work force adjustments and other upheavals.

And no one really enjoys going here, there and everywhere without knowing where the actual path is leading.

Stress Management and Your Life

With ever increasing influences surrounding us today in our efforts to succeed in our professional lives, a lot of us are succumbing to the adverse effects of extraordinary job stress. There is no denying this fact. Yes, we might be making a lot of money or we might be without a job. But all this is coming at a price. Yes, we are all fairly attuned to the need to bring balance to our lives and we are nurturing our spiritual lives. All well and good! But there is no denying that we are still surrounded with influences that require us to do more. Make even more money. We are bothered by the "he made it, and why not I" phenomena. And now-a-days those of us who are still employed are confronted by a tremendous pressures to just maintain our jobs in the light ever increasing challenges of just staying employed.

I hear a lot of comments like:

"I do not even get or have time to go to a doctor, in spite of the fact I am very sick".

" I have to carry-on in this horrible work culture because I do not want to loose all the money this organization owes me."

" I have very high cholesterol, my doctor says I need to take it easy and live a healthy life."

"I do not even have enough time to see my children."

You get the picture, right?

Just because one or two of our colleagues have made it big, a lot of us feel a need to emulate their success, There is nothing wrong with that except here there is a given - a lot of work stress! No denying that, no one can claim to have achieved professional success without many a sleepless night and endless cups of coffee. So how is one to cope? In my consulting and career advising practice I observe a clear trend. A lot of people come and ask me to help them to balance their lives. Specifically how do they find jobs that fit their desired life-styles, which involves spirituality, healthy living, healthy eating, a reduction of travel, and the time to exercise. The point here is that no matter what we do these days we are going to be exposed to a high level of professional stress, so the main solution is to learn and practice coping mechanisms.

Here are some suggestions from stress experts:

Build rewarding pleasant relationships with as many colleagues as you can.

Don't bite off more than you can chew.

Build an effective and supportive relationship with your boss. If your boss is terrible get rid off him/her.

Understand the boss' problems and help him or her understand yours. Unless of course your boss is a total looser this will not work.

Negotiate with your boss for realistic deadlines on important projects. Be prepared to propose deadlines yourself, instead of having them imposed on you.

Study the future. Learn as much as you can about likely coming events and get as much lead-time as you can to prepare for them.

Find time everyday for detachment and relaxation.

Take a walk around the office now and then, to keep your body refreshed and alert.

Make a noise survey of your office and find ways to reduce the noise.

Get away from your office from time to time for a change of scene and a change of mind.

Reduce the amount of trivia to which you devote your attention.

Limit interruptions. Try to schedule certain periods of "do not interrupt" each day and conserve these periods for your own purpose.

Do not put off dealing with distasteful problems.

Make a constructive worry list. Write down the problems that concern you and beside each write down what you are going to do about them, so that none of these problems will be hovering around the edges of your consciousness.

This list is from Dr. Karl Albrecht.

Other suggestions I have found that work for me:

Listen to classical music as you drive.

Walk a lot.

Find an extravagant friend - an extravagant friend is one who does not need anything from you and from whom you do not need anything in return. Spend time with this person spontaneously. Avoid so called friends who only seek your friendship and attention when they need something from you. Oh, have I lost on this score? Trusting people as friends can cost you a lot in stress. We all constantly come across "fair weather" friends, who change their allegiances at the wink of an eye.

Engage in a lot of humor and laugh a lot. Do not take yourself seriously. Sometimes I have found the workplace is a very tense place without any humor.

Understand the "Boss Index" factor that exists for you in your job. If it is higher than 7 then you will have to take drastic corrective measures. Your immediate boss, in my opinion, can be the single most important factor in the level of your job stress. For the "Boss Index" test please visit my website - www.biswasandassociates.com and go the Resources page.

But, above all, do not equate professional success with only the money meter. Even if you have not made a million, who cares, as long as you have lived comfortably and have done a job well, with success and in which you are yourself are satisfied with the results intrinsically, not just extrinsically. Look for and engage in things in life are truly important and which have lasting value - which Dr. Steve Covey so aptly describes as the second habit of highly effective people.

There are many a professional I have come across in my almost forty years of working who have not made that proverbial million but still have accomplished a lot with a great deal of satisfaction.

Jai Ho!