Motivating the Middle

How to reward the best without alienating the rest.

Career-development strategies for the mighty middle became top of mind for BellSouth’s Moore after an assessment of the program for high-potential finance employees made him realize how little attention had been paid to the others. As it stands now, BellSouth has a financial staffing task force, made up of about 15 senior leaders, that meets quarterly to review the development of the 100 to 150 most likely candidates for promotion. To be considered, Moore says, an employee must be deemed promotable to one to two levels above his or her current position.

The program is reinforced by BellSouth’s bonus structure. Employees receive a single numerical rating based on a weighted average of all performance variables. This rating directly affects annual salary treatment and bonus-payout results. High performers can receive as much as 120 percent of the average payout, while low performers may get only 60 to 80 percent.

Moore admits that the numerical rating “has been met with a lot of employee anxiety,” but says the upside is that managers are forced into “those tough-love conversations; you’re not allowed to soft-pedal.” He hopes that such honesty will encourage more employees to seek out development opportunities to boost their scores. To that end, BellSouth is aiming to create a junior version of the financial staffing group, which will create a rotation plan for any employee who has been in a job two to three years, and potentially link more employees with mentors.

“One of the benefits of our high-po program is that we proactively move people around [through rotational assignments]. But if you’re not in the high-po group, individual movement can become difficult,” says Moore. That’s in large part because of logistics, but also because most managers have limited time for development activities. “If you go beyond the top 5 or 10 percent of the workforce,” he says, you’re dealing with more people than a manager can process. Given the beleaguered state of the telecom industry, however, Moore is concerned that without a concerted effort, his department’s current 2 percent attrition rate could “go up dramatically.”

In the interest of clarifying and communicating performance objectives, BellSouth is compiling all available career-development tools, including a directory of 400 job descriptions and detailed explanations of the difference between meeting and exceeding expectations in areas like business knowledge and team-building. The information is accessible to all on an internal Website.

Not every finance employee will have a shot at the top job, of course. “But everyone must develop their skills,” Moore says, “either to improve at their current job, or to be able to take their manager’s job.”

Managing incentive compensation will only become more complex, at least in the short term. Projected variable cash pay budgets for 2006 are lower for all categories of employees than they were in 2005, according to a recent WorldatWork survey, which will probably force even more differentiation in bonuses. Stock-option expensing means many companies will reduce the number of employees who receive grants. But whether companies adhere to high-po or no-po systems, unless (metaphorically speaking) they want to field a football team with only one player, they’ll have to find a way to keep the middle ranks motivated.

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