Archives for May 2015

The 4 Competencies of Tomorrow’s Best Leaders

Communicator. Can-Do Optimist. Critical Thinker. Collaborator.

Whenever I write about or mention such competencies, I always do so with a bit of hesitation. The talent leader or leadership development VP will get it — competencies have been our currency in HR forever it seems and they sure do serve up a reasonable lexicon. The business leader will get it too – they just usually don’t care.

When it comes to the CEO and her peers, say “competencies” and you’ve blurted a bad word. It’s usually the code word for “I’ve stopped listening; let me know when you’re saying something worthy of my attention – something that makes a business difference.”

The truth in the matter is just that – mastery of (certain) leadership competencies are requisite for accelerating business results; CEOs, other senior business leaders, talent and HR leaders confirm that. In our 2015 State of Leadership Development Study, we asked almost 200 of those leaders about how important and how well implemented business-driven leadership competencies are. This is what they said:

Business-Driven Leadership Competencies: How Important and How Well Implemented?

business driven leadership competencies

So call them what you may (just not BS) – skills, knowledge, abilities, behaviors, capabilities; the label put on them makes no real difference. The manner in which leaders act, or don’t act, in accordance with their intended outcomes makes a significant difference, and moreover, one that tracks to (better or worse) achievement of business goals.

So the question I often, and understandably, hear then is: For what competencies should our leaders be accountable? If you guessed that my answer are the ones that drive achievement of your business goals, you’re right. That said, I acknowledge that each organization is unique with a slightly (if not drastically) different configuration of business goals. And at the same time, I am confident that the majority of those goals tie in like ways to expected revenue, customer satisfaction, retention of top talent, engagement, defect rates, and other similar business metrics.

If you’ve come along with me this far, then perhaps you won’t argue too vehemently that there is likely some small set (perhaps along with others) of leader competencies for which all high-performance organizations (those that get better results on business metrics than their lower performing peers) hold leaders accountable.

The mission in our study then was to identify that short-list of competencies that are non-negotiable for all leaders at all levels, regardless of their organizational industry, size or region, in accelerating achievement of business goals and leading the organization effectively today and into the future. To satisfy our charge, we asked the question:

Which of the following leadership competencies are very important for achievement of your business goals? How well have your leaders mastered them?

And the results are:

Critical Leadership Competencies For Tomorrow’s Leaders

leadership competencies tomorrows leaders

Depending on your business goals, the information in the “Critical Leadership Competencies For Tomorrow’s Leaders” chart here may hold some other very salient data to inform your leadership competency model and leadership development decisions. But it seems to me that at least one thing is for certain: almost 200 global organizations tell us that their leaders need to be expert:

  • Communicators
  • Can-Do Optimists
  • Critical Thinkers
  • Collaborators

They need these four competencies to successfully lead organizations to achievement of business goals. And that most of them have a fairly broad opportunity to improve their performance in those four competencies. Improving our leaders’ mastery in these four areas requires targeted development and often opportunities in lateral assignments to build requisite experience that propels mastery of these competencies.

Being focused and committed to executing on- targeted development, in a progressive and continuous way, reminds me a bit of a recent post I read by a former colleague: Revoking Your License to Lead.

In the post Glenn discusses how getting to be a darn good leader requires  thorough understanding of responsibilities, aptitude for success, and mastery and competence of critical knowledge, skills, abilities – a “certificate to lead” of sorts that includes a competency component.

Have you defined your leadership competencies? Have you double-checked that the competencies in your leadership competency model align with acceleration of your business goals? Are you missing any? Do you need your leaders to be expert communicators, can-do optimists, critical thinkers, and collaborators? Other?

About the Author:

Laci Loew is a vice president and principal analyst of  talent management for the Brandon Hall Group, a preeminent research and analyst firm covering learning and development, talent management, leadership development, talent acquisition and human resources.

At-Your-Service Perks a Big Lure for Top Talent

Given the choice between a high-paying, prestigious job and work-life balance, many millennials would choose the latter.

In a recent survey from INSEAD’s Emerging Markets Institute, Universum and the HEAD Foundation, nearly half of respondents said they would give up a well-paid and prestigious job to gain better work-life balance.

Increasingly, work-life balance is among the top characteristics employees look for in a job opportunity, and the ability to help provide that balance can make companies more attractive as employers.

“There’s a lot of competition for good employees,” said Jim Flavell, senior vice president of MyAssist. “Work-life balance is a key factor these days.”

MyAssist is a cloud-based virtual personal assistant service that Flavell said he believes can be instrumental in maintaining this balance. Available by text, call, email or even as an app, MyAssist’s network of 300 live agents provide users with 24/7 assistance for any problems or challenges that come up in their day-to-day lives.

Though the exact price for the service varies depending on company size, a company spokesman said the service generally costs less than $10 per employee per month.

“Everyone who uses MyAssist has one-button access to a team of people virtually who are there standing by to help with anything at any time,” Flavell said. “It’s an empowering tool that’s there for people’s peace of mind, for their wellness, for their safety in the event of a problem or a challenge in their life.”

Unlike employee assistance programs, which generally deal with more personal problems, financial concerns or family issues, MyAssist is designed to provide concierge services, such as helping users get around in an unfamiliar location. Flavell himself recently used MyAssist when he found himself driving a rental car through tollbooths with no cash to pay the fees. Through MyAssist, Flavell was able to ensure the amount was paid quickly and efficiently, leaving himself free to focus on the day ahead.

Although personal assistant apps are increasingly common — anyone with an iPad or iPhone, for example, has access to Apple’s artificial intelligence software Siri — MyAssist is unique because it connects users to live agents who are able to help with a broad scope of tasks. Through offering MyAssist as an employee benefit, Flavell said organizations can enable employees to better manage their lives outside of work.

“Employers are looking for ways to take care of their employees, that allows them during their off-hours to live their lives more effectively on their own terms, but also as a company allows them to compete better for the loyalty of those employees,” Flavell said.

Benefits in general have been a go-to way for companies to attract and retain talent. Whether it’s a standard health care package or a perk like MyAssist, employee benefit offerings can make organizations more competitive, said Lynda Zugec, managing director at The Workforce Consultants.

“If there are employee benefits or perks that one organization is offering that another organization I’m considering is not offering, that’s going to be a carrot for me to draw me to that organization,” Zugec said.

And benefits that promote work-life balance in particular are of high value to today’s employees, Zugec added, recommending perks such as flexible work hours, employer-provided child care and the ability to telecommute.

“Anything that makes my life easier is more than welcome,” she said.

Janette Levey Frisch, founder of The EmpLAWyerologist Firm, a legal consultation provider for the workplace, agrees that benefits can be a great way to attract employees, but cautions that employers need to be careful when offering perks.

“You have to be consistent in how you’re implementing it,” Frisch said. “If there is any sort of tax consequence, you need to be careful that you don’t have something that might discriminate.”

With MyAssist for example, Frisch said it would be necessary to define the parameters of which employees would receive access — if it would be offered to all employees, or, for example, be limited to senior management. From there, she said the organization would need to consult with a tax attorney to ensure that the benefit implementation plan is in accordance with federal and state regulations.

“Before you offer certain types of benefits and perks, it’s always a good idea to speak with a tax attorney,” Frisch said.

But should a company decide to offer a benefit like MyAssist, Frisch said it would likely be well-received by employees, both current and prospective.

By promoting work-life balance, benefits like MyAssist can help employees and employers alike, Flavell said.

“Companies are looking for more commitment from their employees, and employees are looking for work-life balance,” Flavell said. “You’ve got to find new and different ways to be there for them when they’re not at work.”

 Reprinted from

Testing, Testing: The Whys and Whens of Assessment

If we want to improve our corporate training, we need to constantly assess our programs in order to determine what is working well and what is not. And so I was a bit distressed when, during my session at the recent Learning Solutions Conference, several audience members said, “I am too busy training. I do not have time to do research.”

This remark got me thinking and I want to share some ideas to help you reconsider the importance of building assessment into your organization’s training.

Why do we assess?

Let’s start with an analogy. My wife Jane complains about my driving. It’s not that I am careless or aggressive. The problem is that I am usually in a hurry and I don’t take the time to check a map or GPS before I leave the house. Like many men, I trust my intuition and assume I know the right way. Unfortunately, my best guess is often wrong and we end up hopelessly lost.

Training is like that. We are so busy training, so busy creating one lesson after the next, that we do not take the time to assess where we are and whether we are making progress. And when our employees fail to thrive, we just train them some more.

Doesn’t it make more sense to slow down, take stock of our position, and make strategic decisions that will help us find the best route to our destination?

Intuition is not enough

There is a long history of people assuming that they were doing good work when they were not. For example, a few years ago, a group of well-intended folks delivered seminars warning college women of the risks of eating disorders. The trainers delivered workshops on campus after campus, always too busy with their good work to assess their effectiveness.

When they finally did do systematic experiments they were shocked to discover that on the campuses where they made presentations there was actually an increase in the prevalence of these disorders. Tragically, it turned out that their workshops destigmatized eating disorders and made women more likely to partake.

Is it possible that your training is having no effect on learners, or worse, that it is actually detrimental to the good of the company? The answer is “Yes” it is possible, and until you conduct systematic assessment you will have no idea whether you are really helping the organization reach its goals.

When should we assess?

If you decide that you want to deliver assessments, the next question is “when” these assessments ought to take place. I polled my audience in Orlando about when, if ever, they delivered their assessments. Here are the results:

Never: 65%
Immediately after training: 30%
In the days and weeks after training: 5%


As you can see, only about one-third of the audience actually conduct assessments, and of those that do, almost all of them conduct the assessment immediately after the training takes place. One trainer explained, “We have the learner available right after training so it makes sense to do the assessment at the same time.”

But does it make sense? Is an immediate assessment going to give you the meaningful data about what people are likely to retain? To best answer this question, I need to give you a bit of background on how memory works.

The 3 Stages of Memory

Most neuroscientists agree that memory consists of three distinct stages: sensory memory, short-term memory, and long-term memory.

Sensory memory

Your sensory memory is a buffer that stores all of the sensory information you receive. Sensory memory seems to store everything you perceive (sight, sound, touch, for example), but this storage lasts at most only a few seconds. The fact is that most of this sensory information is unimportant to you, and if you pay no attention to it, it quickly fades away, never to be remembered. On the other hand, if you do focus on a particular aspect of your sensory memory, the full range of the information is available to you.

To illustrate, assume you are watching your favorite TV show while at the same time, your spouse is going on and on talking to you about his or her busy day. Suddenly, you hear them say loudly, “Are you even listening to me?”

You snap away from the TV and say, “Of course I am, dear.” And in a surge of cognitive effort you search your sensory memory and you recall the last sentence or two. “Uh… You were just saying that ‘George is not finishing his homework and you are getting frustrated with him.’”

The fact is that you were NOT really paying attention to what your spouse was saying. But the information was stored within your sensory memory and by shifting your attention to it, you were able to retrieve it before it faded. Whew!

Sensory memory is the shortest-term element of memory and it decays very quickly. For example, iconic memory (the memory of vision) usually decays within a half-second, whereas echoic memory (the memory of sounds) can last up to three or four seconds.

As you can see in Figure 1, if you ignore information in your sensory memory, it will fade. If you “pay attention” to it, it is transferred into your short term memory.

Figure 1: Memory components

Short term memory

Short-term memory (STM), also known as primary or active memory, is the information we are currently thinking about. Our short-term memory has the ability to contain small amounts of information in a readily available state for short periods of time. In a famous article titled The Magical Number 7, plus or minus two, George Miller argued that people can usually hold only about seven items, for some it is a bit more, for others a bit less. (Recent research has adjusted the number down a bit).

We can usually maintain information within STM for as long as we continue to actively process or rehearse it. However once we stop actively processing the information, perhaps because we are distracted by another thought, the original memory trace can fade in a few seconds.

To illustrate STM, assume you are being introduced to a series of new junior executives in your organization. Miller’s theory predicts you will be able to actively store and rehearse about seven names at a time. When you are introduced to the eighth person, however, you then exceed the capacity of STM and something has to be pushed out of STM. If the ejected item has been insufficiently rehearsed when it is pushed out of STM that item will be lost. On the other hand, if that item has been sufficiently rehearsed, the memory will be encoded and transferred to long term memory.

Long-term memory

Long-term memory (LTM) is where encoded information is stored permanently. Unlike sensory and short-term memories, long-term memory can store (we think) unlimited amounts of information and can do so permanently. As trainers, our goal is to get our ideas transferred into the learner’s LTM and to ensure that the learner is able to retrieve that information when they need it.

So when should we assess learning?

The value of assessments depends on when you deliver it. For example, if your goal is to determine whether the learner understood complex material and you want to know if they understood the distinction between “consensual leadership” and “directive leadership,” it is entirely reasonable to ask them a quiz question immediately after training that requires them to demonstrate the distinction.

On the other hand, however, if you want to determine whether a learner is likely to remember and utilize information, an immediate assessment is near to useless. The problem is that an immediate assessment simply measures whether the information is contained within the learner’s STM and this has little correlation with whether it will be transferred to LTM. As a result, an immediate assessment leads to the false impression that people have learned a lot. If you want to predict long term retention, you need to delay the assessment, for an hour or even a day, so that you can know that you are really testing a person’s long term memory.

Next month, we will look at other ways that one can use assessment and how best to deliver it.

Digging deeper

If you would like to have your memory of this article reinforced, send an email to You will automatically receive a series of boosters on this article. The boosters take only seconds to complete, and they will profoundly increase your ability to recall the content of these articles.

If you want to learn more about the mishap with the eating disorder training, here are some good references:

  • T. Mann et al. (1997). Health Psychology, 16, 215-225
  • E. Stice & H. Shaw (2004). Psychological Bulletin, 130, 206-227.
  • C.B. Taylor et al. (2006). Archives of General Psychiatry, 63, 881-888.


A short cut for delivering assessment

If you really need to deliver training and assessment during a single session, the trick is to find a way to fully occupy the learner’s mind so that you can be sure that the STM is purged. Memory researchers use the Brown and Peterson procedure wherein students count backward from 1,000 by threes for about a minute. Within a training environment, however, a more realistic strategy might be to give the learner a second training experience before assessing them on the first.

Is the three-stage model of memory true?

The three-stage model is compelling and easy to understand but technically, it is not “true.” No one knows how the brain works and the three-stage theory is just a representation of our best guess. Our knowledge of the brain will continue to grow, and you can be sure that this model will be replaced by one that does an even better job explaining the data. All models are wrong—but some models are useful for a while.

Reprinted from Learning Solutions Magazine

Gamification: Sway the Morally Gray Employee

Picture a moral scale. At one end are those who will never cross the ethical line no matter what. At the other end, there will be those who look for every opportunity to do wrong.

Most people fall somewhere in the middle. These “gray” employees have never had their ethics tested at work or don’t have a strong moral compass, but they can be influenced the most. Chief learning officers can help ensure these employees choose the right path.

Whether ethics training happens in an in-class training session or online, the information doesn’t stick if it’s a one-time event. Employees may find themselves bending the rules, unless they receive continual training about how to respond to an ethical dilemma.

One way some organizations reinforce ethical behavior is by role-playing morally challenging situations that employees could experience. Brooke Deterline, founder of the ethics training organization Courageous Leadership, offers corporate ethics workshops for organizations, including Google. She said role-playing allows employees to “strengthen their moral muscle,” increasing the likelihood employees will take the right action, even when they are under stress.

But although this approach can help, it also falls short. Without continued exposure to this type of ethics training, employees won’t keep this information top of mind in the long term. Yet, the high costs associated with organizing frequent in-person training events means this type of reinforcement isn’t feasible for most companies. Further, as new employees join the organization, they may have to wait for a formal event before they can receive this type of ethics reinforcement.

Employee theft represents 41% of inventory shrink for U.S. retailers, which translates into an annual hit to the bottom line of $18.1 billion – 2012 National Retail Security Survey

Gamification can help to create lasting moral behavior change. Applying game mechanics — such as earning points, overcoming challenges and receiving badges and awards — supports employees’ natural desire for competition, achievement and recognition. Employees can participate in a short periods of daily game play while questions pop up to reinforce ethics training.Because gamified learning is fun, it ties ethics learning to a feeling of enjoyment. So, when employees recall the information they’ve learned, it triggers a pleasant emotional response — one of the surest methods to shift attitudes and ingrain ethical behavior when confronted with challenging situations.

Take Pep Boys, for example. The automotive aftermarket retail chain knew ongoing reminders to its 19,000 employees to do the right thing were critical to reinforce its loss prevention training.

The company decided to implement a gamified e-learning program to continually reinforce corporate policies around loss prevention. For 30 to 90 seconds each day, associates answered quick, targeted questions related to their training. The system then repeated questions at various intervals until associates demonstrated mastery of corporate ethics topics.

The effect was phenomenal. Not only did overall shrink rates drop, but also Pep Boys saw a significant increase in calls to its employee theft hotline.

Whether associates have been with the retailer for years or have just joined, everyone receives consistent training through the gamified e-learning platform. This ensures all Pep Boys associates get the information they need upfront, as well as continued exposure to help them do the right thing when faced with a moral dilemma on the job.

Because ethical dilemmas aren’t always black and white, it’s even more important for managers to clarify the issues, give employees opportunities to strengthen their moral muscles, and help them gain the confidence to act correctly. After all, eliminating the many shades of gray via continual learning increases the likelihood that “gray” employees won’t slide to the wrong end of the moral scale.

Reprinted from Chief Learning Officer

Cracking the Compensation Code

Doug David’s first day in 2013 as director of sales for global education technology company Rosetta Stone Inc. was a messy one.

In particular, when David first dug into the company’s compensation data, what greeted him was a pile of knotty spreadsheets — a trove likely comprehensible only to the predecessor who created them.

Such scrappiness meant Rosetta Stone’s sales team lacked clarity into their commission structure, dulling the incentive-driven nature of those employees’ pay packages. What’s more, the sales team didn’t even have a sense of whether they were close to their quarterly and yearly targets.

“Once a month, I just sent the spreadsheet to the sales team to validate their numbers,” David said, “and they didn’t see it again until the next month.”

Such problems extended beyond sales. Managers from other departments lacked insight into how much their employees were earning, while employees couldn’t track the total value of their total compensation to stack against market standards.

This spreadsheet-oriented environment in an era of elaborate HR technology systems meant Rosetta Stone’s human resources team spent most of its time ensnared in administration, not strategic talent management.

“It was a disparate system with no transparency and a lot of manual work,” said Melissa Yates, Rosetta Stone’s senior director of HR.

But soon after David’s arrival, things started to change.

Thrust by a slew of acquisitions and an extensive business transformation, Rosetta Stone revamped how it tracked compensation by installing new technologies that allowed managers and sales employees to check targets in real time.

The new system also better aligned base pay, commission structures and pay-for-performance incentives with industry benchmarks — an important component toward ensuring that Rosetta Stone remained globally competitive. It also gave managers greater power to oversee their own annual compensation budgets, providing them with added flexibility in how they rewarded employees and paid top performers.

Now, roughly two years into the change, executives say the new system has bolstered the company’s ability to measure compensation while reigniting the sales team’s motivation.

“It is all about creating a more nimble corporate structure,” said Kristy Perry, the company’s director of global compensation.

Language Learning

Since its founding in 1992, Rosetta Stone has grown from a small business owned and operated by brothers to a company with 921 employees in offices around the world. The company offers courses in more than 30 languages — such as English, Spanish, Mandarin, Swahili, Swedish and Filipino (Tagalog).

Life as a public company has been tough for Arlington, Virginia-based Rosetta Stone, which gained popularity thanks to its software products that aim to make learning languages more accessible and intuitive than traditional teaching.

Financial results haven’t kept pace. While the company posted trailing 12-month revenue of about $260 million for the period ended Sept. 30, 2014 — the most recent period for which figures were available at publication — it reported a loss of roughly $56 million in that time. The company has reported an annual loss in each of the previous three years, according to securities filings.

The company is hopeful that 2015 will be a tipping point in the market for online language learning. In a statement released at the end of 2014, CEO Steve Swad said an influx of people taking language courses on mobile devices and evolving relations to U.S. diplomatic relations with Cuba point to promising prospects for the company.

By 2020, Rosetta Stone forecasts that more than 40 million people in the U.S. will speak Spanish. The company says English, meanwhile, is anticipated to be one of the top five languages studied by non-native speakers in the U.S. by 2020.

Such hopefulness likely started in 2013, when Rosetta Stone took steps to stir a transformation by acquiring community-based language-learning platform Livemocha Inc. and reading technology company Lexia Learning Systems Inc.

Company executives said these acquisitions represented a larger strategic transformation to a cloud-based business model that focused more broadly on education technology rather than just language learning. The moves also sparked a shift in how it organized integral employee data, including compensation.

Coinciding with David’s 2013 arrival, Rosetta Stone implemented two new software systems: Workday Inc.’s human capital management software and Xactly Corp.’s sales incentives compensation management. Both are cloud-based, which aligned with the company’s new business model and minimized upfront costs of creating a new compensation program, Yates said.

“It was more about investing in the implementation and maintenance of the software,” she said. To process the transformation of corporate data, Rosetta worked closely with the software vendors, populating multiple data import files with all employee information, including compensation details, Yates said.

The vendors also helped Rosetta build out the compensation plans and eligibility rules and salary ranges by country, which were then assigned to employees as part of the data loads. “It took approximately six months from the kickoff of the project to implement Workday in six countries,” Yates said.

Her biggest concern was making sure the data were accurate. “This was the first time that employees would have full transparency into their compensation,” Yates said. So they had to be certain everything was clean and up to date. “We had to do multiple iterations of data scrubbing and loading in addition to testing to ensure that we were rolling out an accurate system.”

Using the company’s business strategy to shape how it implements new systems to tackle HR metrics like compensation is well-advised, said Elissa Tucker of nonprofit management research firm APQC. “It’s important to define your strategy up front and tie it to human capital goals before you adopt any technology,” she said.

This includes standardizing compensation processes, establishing metrics to measure progress and creating a communication and training plan to make sure employees understand why changes were made.

Despite the perceived effectiveness of this approach, many companies don’t abide by it. Just 40 percent of HR practitioners said their organization’s compensation program is fully aligned with the business strategy, according to a 2014 compensation and benefits survey by Human Capital Media Advisory Group, the research arm of Talent Management magazine.

Starting Small

To ensure employees embraced the new system, Perry’s team launched a companywide training program for employees and managers in conjunction with the software rollout.

Specifically, the training included a mix of in-person and on-demand training as well as demos of the various features so employees could learn in the way that best suited their preferences. The topics covered basic employee self-service strategies and manager features like how to make compensation changes, do performance reviews and implement one-time payments.

The company held numerous webinars to cover the basics of navigation in both systems. It also created a knowledge base on the company intranet with videos and quick-start guides that could be referenced at any time. “The training tools have been especially successful for the new salespeople,” Yates said.

To further ease employees into the transition, Rosetta’s HR team staggered implementation of the tools. It rolled out the core Workday HCM suite in May 2013 before adding payroll, time tracking and absence tracking in January 2014.

“A key to the rollout was identifying a group of enthusiastic managers and employees who helped us test functionality and provided feedback so that we could modify configuration prior to going live,” Yates said. “They leveraged these ‘evangelists’ post-launch to help ensure broad adoption throughout the company, by getting them to talk up the tools to their teams and share success stories.”

Improvements were evident almost immediately. “Prior to Workday, there was no visibility for managers or employees into their compensation or even basic details HR had on file for them,” Perry said. “Since rolling out Workday, we’ve increased transparency 10 times.”

In one of the early demonstrations of the success of the system, Perry’s team received a large number of inquiries regarding data and requests for changes because of outdated information or discrepancies. “For the first time employees could see the true employer contributions for their benefits as well as a real-time view of their target compensation and bonus plans,” Perry said.

The combination of new technologies and more flexible compensation packages quickly benefited HR, management, employees and recruiters at Rosetta Stone.

“Having an automated system frees the HR team from spending so much time managing spreadsheets and checking for errors,” Yates said. “The system has cut administration tasks so we can prioritize more value-add tasks.” That freedom from paper pushing allowed the team to prioritize core HR issues.

Managers can now take advantage of self-service tools to see how they’re distributing their pool of resources compared with company and market trends. This helps them make better decisions about whether to build things like incentive programs or to ensure their team is falling fairly within accepted salary ranges.

The new tools also gave the company the data necessary to fully comply with corporate accounting regulations enacted after the Enron Corp. scandal of the early 2000s. The regulation requires audits of all public companies that demonstrate full financial disclosure, said Scott Olsen, U.S. HR services lead for professional services firm PricewaterhouseCoopers.

“Governance isn’t sexy, but it’s an important part of comp and benefits programs,” Olsen said.

Speaking Clearly

The technology has not only given Rosetta Stone’s management greater transparency in how compensation is structured, but also given sales employees a new level of transparency as well.

For the sales staff, Xactly provides the ability to review their compensation package and current standing at any time, giving greater insight into their sales status. Errors are also less likely; thanks to the real-time functionality of the software, sales staff can spot efforts before their paycheck is due.

“That’s one of the benefits of an open system,” Perry said. “The more eyes that are on the data, the more accurate it will be.”

At the same time, it gives managers like David the ability to make changes to individual compensation plans and to create multiple settings for different roles, regions and product categories. “It’s awesome being able to go into the system as a manager and be able to move things around and see what everyone is getting paid, without having to track down HR to get answers,” he said.

One of the David’s favorite features has become the ability to create one-off incentive programs to motivate certain behaviors. For example, in 2013 one of the company’s strategic goals was to shift priorities from one-off product sales to subscription-based services. To support that goal, David launched a cash incentive in the fourth quarter for all digital sales.

In third quarter of 2014, David launched a similar program to motivate the U.S. sales staff to close business earlier in the quarter. “We always see a spike in sales in the last couple of weeks,” David said. That, however, made it harder to manage volume, especially for operations people who get flooded with end-of-quarter orders. “We wanted to level out the spikes so we can stay on top of that volume,” David said.

So he created a short-term incentive program that gave extra “credits” for sales completed by midquarter as opposed to the end of the quarter. In both cases, he set up the programs through Xactly, which automatically adds credits as the deals are closed. “It gives the sales team a real-time view of how their sales are trending and gives them the extra boost they need to get focused,” David said.

The new systems are also helping recruiters attract sales talent because it gives them a visual tool to show candidates what their comp plan will look like and makes manager more confident in offering guaranteed draws for new hires.

This can be an obstacle for recruiters wooing passive candidates. In the past, the company was hesitant to offer recoverable draws — which guarantees new hires a minimum monthly payment against future commissions — because it was too complicated to keep track of in the spreadsheet system.

But Xactly can track draws for them, which makes managers more comfortable. “From a recruiting standpoint, it’s very beneficial for recruiters to have that in their back pocket,” Yates said.

Globally Sound

While the new compensation system’s implementation in the U.S. was fairly painless, Rosetta Stone executives said it required a little more planning on a global level. The company had to make sure all plans met the unique regulatory requirements of each country.

Rosetta Stone’s compensation team is in the process of customizing new compensation plans for every country where it operates. For example, in the U.S. Rosetta’s sales compensation plans are typically 50 percent base and 50 percent commission, but in Brazil the sales team receives a 70 percent base and 30 percent commission “because that’s what the market dictates,” David said.

Local laws and regulations also affect the compensation plan structure. In Mexico, employment law states that salespeople must be able to participate in profit sharing. In Brazil, salespeople must be paid on a 13-month schedule to accommodate paid time off. And in China, every city has a different set of regulations and sales teams often benefit from collective bargaining.

“It’s a challenge to get it all right,” Perry said.

Once the country’s plans are defined, they’re implemented through Workday and Xactly, which translate payments into local currencies and back to U.S. dollars so Perry can generate local and global reports on the company’s compensation budget to make sure sales goals are on track.

As the compensation and HR team work to get more familiar with the tools in 2015, results from the implementation are already coming into view.

Yates said her team already generates reports on how the company and each department is distributing compensation resources, and she’s beginning to do workforce analytics to track how such compensation changes are influencing business results.

“We can see who is above or below trends and compare it to things like attrition rates and productivity,” Perry said. That, she said, will help her make more strategic decisions about compensation going forward. “We want to see trends, both positive and negative, so we know where to focus of efforts.”

Rosetta Stone hasn’t yet quantified whether long-term increases in sales can be tied directly to the software, but it was able to meet target sales goals with its incentive programs. “Having access to the data and combining it with a cash incentive definitely motivates the right behavior,” David said.

In addition to continuing to track sales results, Perry anticipates being able to use the data in future workforce planning efforts to forecast compensation expectations for the coming year.

“From a strategic standpoint, these tools are having a huge impact,” Perry said. “We are trying to be more profitable and more efficient, and this technology has been a catalyst to help us do that.”

Reprinted from Talent Management Magazine

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