How to Run the Most Excellent Merit Cycle Possible

ON THIS EPISODE OF HIGH GROWTH MATTERS

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TRANSCRIPT

CAITLIN ALLEN: So we are in the new part of the year, which means it is attrition season and retention is top of mind for people, leaders all over. And so today we're going to speak with Jamy Conrad about the science of helping top employees thrive and stay in seat longer by running a merit cycle process that is both transparent and empowering. Jamy is the Senior Director of people at trust radius, and she boasts an impressive track record of HR roles at Tech and healthcare companies. So Jamy, thank you so much for being here.

JAMY CONRAD: I appreciate that. Welcome,

NANCY CONNERY: Jamie. I second that. Thank you so much. We're very much looking forward to this conversation today. And in that vein, what's the one thing your coworkers don't usually know about you?

JAMY CONRAD: We got to kick it off with some of the harder questions. So I would say I started one of my first paying careers was working in a hardware store in a small town. And I learned so much about DIY projects and home improvement, and problem solving in general and just listening to how people are going about solving problems. So that's probably my career goal, too. When I retire from my HR professional career, I'll probably do something along the lines of working in a hardware store and helping people with their home improvement projects. Love it.

CAITLIN ALLEN: Awesome, I love those kinds of anecdotes. They're they're good look under the hood, so to speak.

JAMY CONRAD: You learn a lot. That's first. Yes, yes,

CAITLIN ALLEN: absolutely. I'm a well rounded human. Before, before we get into merit cycles, specifically, Jamie, I think it would be helpful for our listeners to understand a little bit about the infrastructure that you have built at your team to to make merit cycles. Excellent. And so maybe we can start with what your team looks like, and, and what process you've you've gone through to to get ready.

JAMY CONRAD: Well, I've got an HR manager that I work with, and then our CFO who's amazing, he's a great support, and helps keep us in line and on track and takes care of all of those pivot tables that I love so much in Excel. But I think it's important to start, you know, base basic comp, and how you go about running your merit cycle starts with having that really strong comp philosophy created and communicated. So when we talk about compensation philosophy. For us, we try to do as much as possible to lean into our core value of transparency. And while we don't share all information about all everyone's pay, and it's not, you know, public knowledge, what we do try to make sure that we do is we've defined some of the strong the core pillars of that that strong comp philosophy, equal pay for positions, what all it takes into consideration from a total rewards and compensation and not just base and, and variable comp, do influence on our benchmarking. And then you know, an overall arching goal of how pay is less about being transparent with all the information. But more about defining this is why you make what you do here at TrustRadius. And here are ways that you can go about making more and I think that's the crux of what people want to understand anyway. And then, you know, my stance on all things when you're trying to build, you know, we're building our HR department, from the ground up. And so my stance whenever you're trying to build is start with just what's happening, what is what is going on? How are people making those comp decisions now, document it and get it communicated out, look, here's what's happening, then you can make those changes, then you can make those recommendations, here's what's happening, here's why it may or may not be working, and here's why it may or may not be working in a specific position, or a specific area. And you can make those adjustments along the way. You know, we've got ours currently in our employee handbook. And then we've also made it part of our our hiring process so that we're transparent about our current philosophy and from the very beginning,

CAITLIN ALLEN: that makes a lot of sense. And on that vein, how are you building or how have you built maybe is the better way of asking the question your career leveling framework so that comp bands and comp philosophy gets applied in a way that's understandable through the lens of progression for employees. Yeah,

JAMY CONRAD: I think that's that comes down to Job levels and pay grades. And having all of that combined into something that managers and employees can comprehend and work with on a regular basis, you know that the whole point of this system is to make sure that we're able to produce outcomes from employees. And so we want to make sure that we're building it with the employees in mind. If you go through a process, and you create something that managers and employees can't use, what's the point? So ours tried to take a real practical approach, we're still crafting and creating ours as we speak, make it user friendly and flexible, so that it can be changed along the way. It doesn't have to be rigid. And then we want to make sure that whatever we put in place, that it's built on the competencies that we think will make somebody successful at our organization, so that employees and managers can then take that, and that's the most critical part is that handoff, right? How are managers and employees going to get to take that and run with it, we want to make sure that they can assess the current skill level. And then we want to make sure they understand what their opportunities are for growth. What are they trying to get to to understand that gap analysis, once you've understood the gap analysis, you can create your SMART goals and your your OKRs. To to get you there, right and build your roadmap. But the most important part, like that's all the administrative part, most important part is actually following through and communicating back and forth between the manager and the employee along the way, candid feedback, real time feedback, here's my ideas, I'm running into these roadblocks and having that two way relationship for employees and managers to feel like they have the psychological safety, because they're in it together, they have to be partnered together.

NANCY CONNERY: Very true. It is a partnership. And I also do agree with you know, if you're going to go to the lengths of doing all this, let's do it right and absolutely follow through. And, you know, how do you, you know, communicate the career pathways and offer, you know, stretch opportunities to the employees.

JAMY CONRAD: I think that this is actually a disconnect and how we think about the whole process. Most people when they think about career pathways, they think of it as an HR function, right? HR provides a career pathway, but in the reality of a small organization that may work and be what's needed in large orders. But most of the businesses that are needing these are smaller organizations, they're in real time, they're 100 employees, maybe give or take 50. And so it's really important for maybe HR to build a framework that's realistic, but it has to be driven by the leadership, the executive leaders, and those mid level managers and directors, because they're going to be the ones that understand what's going to be needed in that profession. And what it really looks like from a mentor and coaching standpoint, and then, you know, once the business leaders they know and they understand that then they can mentor and guide those frontline managers as well. Because they're going to be the ones determining those stretch goals along the way. And it's going to have to be with the idea that you can be flexible and agile in the moment based off of the business names. And so again, it goes back to having that culture of psychological safety where you can have those conversations quickly. And in real time.

CAITLIN ALLEN: One of the things that I feel like I see a lot, particularly with first time managers is that they're uncomfortable talking about performance, particularly right when there's some feedback that needs to be given. And I'm curious if you have any, you know, unlocks or tips for how to train first time managers on the business value in whatever words you want to put on it, the efficiency, the relationship building, the trust, the culture, the high performance that's built in those kind of interactions, when someone's new to that kind of role.

JAMY CONRAD: I think the more you can do to take the subjectivity to have them focused on what's objective, gives them more security, if they can start with the metrics, if they can start with measurable goals, then that takes some of the emotional side of of the fear out of those conversations. So I was encouraged those frontline managers start with building your structured performance management mindset, right? Start with those metrics that you're going to be able to measure and point back to and also make them I don't want to say complex But robust enough that it pushes the employee to grow and to feel like they're making an impact and difference when it comes to the vision and mission of the organization as a whole. So anything you can do, especially for those first time people leaders to take the guesswork out of it is going to make them feel more confident going into those conversations.

CAITLIN ALLEN: Yeah, like frameworks and roleplay, almost making it something that it becomes muscle memory and not just a new experience. Right. Right. Makes sense? Well, great, thank you. I got us a little bit off topic on that one. But but something I'm always interested in hearing. Just because I think it's such an unlock for organizations, we all first time managers. How, then do you and your team approach running an effective Barrett process like this year, what's been what's been your process up until this point, and what are the next couple of months look like?

JAMY CONRAD: Um, so I would like to say that merit process has kind of been like the Wild West here since I started, there's some happening all the time. So I'm very excited about the idea of structuring and formalizing an actual merit cycle for the company. The the first we're doing a performance cycle, company wide, q1, and then merit cycle shortly after, to start q2. And so while we haven't run one yet, at this organization, we are working very hard to prep for it. Things that we're keeping in mind to make sure that our prep work, it will lead to an effective merit cycle. We're going to be updating our benchmarking data. We haven't we've kind of been ad hoc with, you know how we've we've done that in the past. So we're going to make a more structured process. With that. We're going to make sure that any adjustments resulting from PE and neck inequity, which are not any for us, thank goodness, but we'll do a double take, once we get that new benchmarking. Make sure any pay inequity or pay transparency issues are adjusted for ahead of that. And then heavily trained managers on those talking points. And don't forget, you know, there's the admin side of it. So do we have the right comp, technology and are we wouldn't need to make sure that we audit everything, before, during and after, if we decided to do it manually, and making sure we have the tools associated with that, to be successful and reduce any errors along the way. I think that's really important to your comp cycle is really important. Your marriage that was really important, especially if you only run one a year, which some organizations are still only doing one a year. So you gotta get it right, you've got to put the time in.

CAITLIN ALLEN: Yeah. And I really think that what you just described really defines or describes some of the differences between amerit cycle that empowers an organization and to use your phrase, The Wild West. So. So that makes sense. Maybe for some context to Jimmy, what are what's your location strategy for pay? Do you pay, you know, based on a US standard or by tiers?

JAMY CONRAD: So we were primarily Austin based for the majority of the organization's lifespan. So we were using Austin first, if there wasn't enough data, then we weren't pulling National Information and, and very, very rarely where we're using geo specific. Just recently, we decided to go remote first remote fully. And so I think there's going to be a need to relook at that part of the compensation philosophy going forward. But as of right now, we've made the choice to run our headquarters, as our main and national is our our backup or secondary.

NANCY CONNERY: Great, you know, and given the economy, the labor market, the new pay transparency laws that we are all, you know, coming up to speed with, you know, are there any special considerations you have in running, you know, an amazing merit cycle, specifically this year, with all those pieces in the mix?

JAMY CONRAD: If there's not one thing, it's another writing things into consideration. I'll actually steal an idea to answer this one, your own head of people at open comp Ashley. Brownstein, and I were able to be on a panel recently together and I loved her answer to this and so I'm going to steal it openly and gratefully to her. But we plan to communicate and take on as much of the responsibility for for that communication. You know, there's a lot of of considerations like you mentioned with pay transparency and labor market and economy and inflation and all of that. And so we want to make that part of the conversation that we as an organization have with the organization. So you know, whether that's our CEO or CFO or myself, trying to, to give as much of context from the organization standpoint, so that when our managers come in, to have those actual one on one conversations, there's less ambiguity about how we got to those numbers, how those numbers were, were presented. I thought Ashley had a great idea on that. And so I'm gonna learn from her and take that and run. Love that.

CAITLIN ALLEN: Yeah, we all need to do that from each other for sure. Maybe circling back to, you know, we've touched on some of the things that can go well, or that you're improving at trust radius, perhaps a different let look at the same coin, where in your experience, and Nancy, maybe you can chime in here, too, given your time and seat as a leader, where demerit processes go wrong? And then where that's consistent, you know, where Wild West gets created? What can your team or what does your team do to prevent those common missteps apart from what you've shared already?

JAMY CONRAD: I think empowering those managers to understand it is, is where a lot of companies, they gloss over it, right? They've got the budget they've got, they know what they can and can't spend, and they may or may not have a structured performance management that influences comp, right, there's that decision that has to be made. But then they just gloss over. Okay, managers, here's your budget go. Right. And they they forget to spend that time with those managers to making sure that they understand the why. And, and that managers understand how to say no, and here's why. Right? Often that part of it gets forgotten about. And so a manager gets pushback from an employee about their merit increase amount, and the managers kind of like, Oh, crap, I wasn't expecting this, what do I do now. And so you know, making sure that you spend that time with the manager so that when they have those situations come up, they know how to navigate those conversations, providing them with guidelines, providing them with talking points, providing them with the comp philosophy, providing them with metrics that are important to take into consideration when we talk about how to make a merit increase recommendation. And then also, just, you know, a lot of times unfortunately, we see the loudest person, the person that yells the loudest gets more of what they want, even if it's not budgeted or appropriate or supported by data. And so feeling comfortable having managers feel uncomfortable on how to navigate those sometimes squeaky wheels in an appropriate way. Yeah, I think sometimes they're not,

NANCY CONNERY: they're very much so I that investing in the training upfront. And, you know, as you said, Jamie, you know, making sure that they're prepared to have those difficult conversations, because these conversations don't always go the way that they're supposed to go. And, you know, I think for a lot of first time managers, it can really be a growth opportunity for them, to learn how to have those conversations to provide the feedback, it also shows them the importance of giving regular feedback along the way. Because I'm a big fan of when you give when you have these conversations around performance merit, that there are no surprises, because there's been this open communication all along the way. So it's already information. They know, they know how they're performing, but you're just coming in with more information and more data that supports what the conversation has been, like, all along the way. And that's difficult. You know, in particularly in our industry of tech, there are a lot of first time managers that aren't necessarily comfortable, you know, having those conversations. So and investment upfront is is, you know, absolutely worth its weight in gold. Yeah. And, you know, Jamie, how do you communicate eligibility for merit increases, you know, during this interesting economic period that we're in?

JAMY CONRAD: You know, I think from my perspective, if you're an employee that's hitting performance metrics, then you deserve a minimum, at minimum, an annual merit, increase consideration. If there is a need for an organization to limit eligibility on merit increases. I think it needs to start with the executive team first. And you max out whatever comp savings or adjustments you need to make at the executive level. If that's absolutely not enough, and you can't max out your cuts with your executive team and it has to trickle down, then I think it needs to trickle down equally, in the same manager in the same manner, have been challenged with that line of thinking, you know, investing more in certain areas of the business can provide higher yields. But when it comes to your annual merit cycle, I don't think that's appropriate. And I think that your turnover costs, I've proven More times than not that your turnover costs, if you do it any other way end up being higher than the savings you think you would have gotten. Because of the decision to not treat people equally or, you know, have it along the way. That's the same philosophy along the way.

CAITLIN ALLEN: It's such a good point. My My husband is the CFO of a company, that's about 250 people, and they did some analysis recently about the cost of attrition versus the cost of what it would have taken to like given pay raises to certain people or people above a certain performance level. And it was in the the six figures turned out six figures. It was in the Yeah, the 100 1000s whatever that that that six. Marketing. But yeah, I think it's it's a really it's a really solid point where where there's a lot of similar alignment between HR and and finance teams, for sure. Switching gears a bit, Jamie, you know, you you alluded it a couple minutes ago to the fact that pay inequities do not exist right now, at least according to benchmarking you had from last year, which is not to overstate is pretty staggering. Like it, I would love to understand how you've ensured that pay equity. And, you know, and also during this merit cycle that starting how do you represent under employee? How do you support underrepresented employees who, you know, especially during economic seasons, like right now, data shows are most susceptible.

JAMY CONRAD: So I think this is one of the most critical parts of any compensation leader in an organization, whether that's HR or finance, or wherever it follows some of its common benefits. The biggest thing is don't assume anything, don't assume that the hiring practices are fair. Don't assume that your that your management teams have been consistent along the way. Don't assume that people understand how their pay is structured, or where those numbers come from. Don't make any assumptions. If you're if you're going to look for pay inequity. And especially when it comes to DNI efforts, or underrepresented employees in any way, have solid processes in place to avoid it to begin with. That starts with the hiring process. You know, make sure that whatever your current philosophy is, make sure that it is competent and being enforced in that that very beginning stages, because that prevents so much of any inequities along the way. And if you are in the role of reviewing and approving compensation adjustment requests, whether that's through a merit cycle or outside of the merit cycle, you have a responsibility to ensure that it's being fair, applied fairly and equitably. across the organization. I love when I have executives come to me, and they've got an employee that maybe is going on maternity leave in two months, and they want to move forward with a promotion and large compensation increase anyway. Right? Those are some of those situations where executives or businesses can make many different choices and have made many different choices in the past. And so when I see some of those things coming through, that tells me that we're doing the right things and we're supporting a culture in the right way to avoid having those inequities in the future.

NANCY CONNERY: That's great, particularly particularly that that reference point in that example, I agree wholeheartedly, you know, and and as we are in the new year and thinking about, you know, retaining employees, what are some of the methods that you all will do to, you know, retain your employees, in addition to, you know, obviously merit and comp increases?

JAMY CONRAD: Like I alluded to earlier, standardizing our performance management practices across the organization is going to be key for us this year as well. We haven't had that in the past is the product of a growing organization. A lot of different All aspects of people leadership was left up to the individual management managers to run. And so we're trying to put some structure in place that is through the entire organization, rather than having those differences depending on the leader or the department that you're in. And so I think that's important for growing organizations to take a look at. We're also very focused on being an employee centric workplace, which is really important to us. We want our employees to know without a doubt that that we're the employer that they want to work for. And we want to know that we want them to know that if we're not for any reason along the way, that they can come tell us why not. And we'll have a conversation with them. So that's really important. And then the other aspect is, you know, that career path work pathway framework that we're working on, helping those managers specifically grow so that those professional development opportunities for growth can trickle down through the entire organization. That's, that's a structure that's important. But again, it's about empowering those managers to have the conversations when needed, and appropriately when they come up.

CAITLIN ALLEN: Yeah. And speaking of employee centricity, you, your company, thanks to the work you're doing actually won open comps nomination as an employer to watch because of its employee centricity, which was pretty cool. So yeah, I loved seeing you there. It made me pretty excited to Jamie, one of the things that I have admired about you, since we met a couple months ago, is just the generosity of your thought leadership and kind of the consistency of your voice in the market. You're You're a fairly active thought leader. And so this, this next question is, you know, a bit for our audience and a bit for myself from that lens, and just from a broader lens as well, what is what is doing well at work mean for you as a woman in tech? And maybe there's a gender nuance there? Maybe there's not at all. But like, I'm just curious what that means to you on a personal level.

JAMY CONRAD: And ending with just a tough question is the one that we started with, right? I think success for me is being seen by other women in tech as a role model. One of the things that I've learned moving from healthcare HR, into the tech industry, is that there's just a huge lack of women, tech role models. And so if, if I'm able to influence in a positive way, then I think I'm doing something right. And if people continue to want to hear what I have to say, then I think I'm doing something right. So I want I aspire to be a woman in tech role model that can help with bridging some of the gap that is there.

NANCY CONNERY: Well, congratulations, because I think you're well on your way to achieving that. And lots of very relevant, thoughtful information, you know, was shared today, you know, we always do save this question for the end. And it is actually a favorite question of mine. You know, what, in your mind is the most important thing that we've talked about today that the listeners should really remember and take away from this very important and relevant conversation?

JAMY CONRAD: I think the not making any assumptions is the most relevant, I think that that can be applied to comp it can be applied to pay transparency, it can be applied to DNI, right? And across the organization, when it comes to relationships, psychological safety, taking away opportunities, or removing those opportunities for assumptions to be created, or, or bought in as belief is really important. And the more you can be candid with your conversation, the more transparency you can have, the more you are diligent in how you're approaching things. And if you see something, say something, speak up. You know, I think I think that's the key just by removing assumptions in what we're doing in our daily work, how we're approaching each other. And if we, if we feel like there's something that's not right, let's look at it, let's talk about it, and have those open conversations. So whether that's comp whether that's career development, career paths, frameworks, doesn't matter. People in general just need to be able to talk to each other in a candid and open way without fear. And that psychological safety that's associated with that will take away a lot of the issues that we continue to run into.

CAITLIN ALLEN: So simply said, very succinct and clear. You This has been a really valuable conversation. Jamy, thank you so much for your time today.

JAMY CONRAD: I appreciate it. Caitlin, Nancy, it was a pleasure.

NANCY CONNERY: Thank you, Jamie.

CAITLIN ALLEN: It really has been and to our listeners, don't forget to leave us a five star rating and if you have any ideas for topics or guests, you can email podcast@opencomp.com. Have a wonderful day.