Admit you don’t know, or accept the risks of silence : a Compensation example

Admit you don't knowPressure to perform, fear of looking bad in front of others, feeling uncomfortable about admitting our limits…. Very often, at work, we are tempted to pretend.

We don’t want to say that we did not understand what the boss meant when she gave us an assignment. We don’t want to say to the employee asking for our help that we don’t know the answer to his question. We don’t want to admit to the Head of Division, our internal client, that we have never worked on a similar project and we don’t know where to start.

And so we say “OK boss” instead of asking questions to better qualify the assignment. We may answer the employee with an abrupt “That’s not in the policy”, or the answer to a similar question but not exactly the one asked by the employee.  We don’t ask the Head of Division to explain his vision and expected outcomes, and with whom he’d like us to work on the project.

Of course, this is wrong. It is not helping the other person, and it is not helping us. We don’t deliver or live up to expectations, often creating resentment and bewilderment on the client side. And we don’t give ourselves a chance to learn, understand, and be able to work on something new that makes us proud to expand our skills.

Everyone is robbed of an opportunity when we don’t want to admit that we don’t know.

Admitting you don’t know is also an opportunity to gain credibility. How ? Because next time you get a question, if you say : “I am sure of my answer”, the person in front of you will believe you – because they will know you would say otherwise if needed. So the occasional confession actually gives more weight to the 99% of times when you are within the boundaries of your ability and experience.

This is at the individual level. So imagine the giant impact on the whole employee population when it’s the company (or let’s clarify, its top management) that doesn’t want to communicate or explain the limits of its knowledge or influence.

Right now, you may be wondering : “What is Sandrine talking about ? How can a company decide to pretend to all its employees ?”.

Well, let me give you a real-life example from one of my previous organisations.

At this global company, many employees were granted equity under various programs, such as long-term incentives for senior management, recognition awards, retention for high potentials, all-employee ownership schemes etc.

In one of our operating countries, national elections took place, government changed and suddenly there was a declaration that a new law would be passed very quickly. The preferential tax treatment that had been granted to equity compensation until this day would disappear, back-dated to grants made up to one year before.

You can imagine the panic and number of questions that employees started to ask management, HR, and, obviously, the Compensation & Benefits team. Could we tell them the exact impact on their earnings ? Would the company compensate employees for the loss in financial value created by this change in legislation ? Would there be exceptions to the new rule ? and so on, and so on.

Management did not have a clue. They had no-one in a position to lobby at Parliament and government. They didn’t have access to draft versions of the new law. They did not know who to approach to negotiate a potential exemption for our employees. And Corporate had taken a “wait and see” stance and explained that the plan might be revised but only after the law would be passed – but this had to remain confidential as HQ figured that communicating this relatively passive approach would look bad for them.

So Management decided to issue a 3-line statement that went something like this : “The company is aware of the planned changes in the tax treatment of equity-based compensation in our country. We will revert to you as soon as possible with updates on the situation”. HR and C&B were instructed not to give any answer to employees on this topic, and to close the door to any speculation.

And then, the company went silent.

For months.

In the first few weeks, the number of queries dropped as employees felt re-assured that “something” was taking place behind the scenes, “something” was going to come out and they’d get some answers. But then, they started coming to us again.

Faced with official silence from the organization, they tried to find out if they could use their friendship with us, or their position in the hierarchy, in order to get an idea, “in confidence – I’ll keep it to myself of course”, of what was happening.

Obviously, at that point, our credibility melted like an ice-cream in the desert.

Management was accused of not caring. Engagement levels dropped significantly, as shown in the annual employee survey that took place 3 months later. Employees with vested stock exercised them all in an attempt to avoid the anticipated taxes. Many tried to negotiate “exceptional salary increases” and “one-off bonuses” on the basis of their future “losses” (which, in reality, were lower gains than previously expected). Some of the top performers left for organisations with a more traditional, cash-based package – trading higher but not-guaranteed future rewards for pay certainty.

All this because Management refused to admit its limits, and declined to comment and update staff, even if to say “We still don’t have news but we are still trying to find out”.

They wanted to save face and pretend they knew, and things were under control. But all they got was an increased sense of insecurity in the organisation, a loss of productivity, and most importantly, staff who now had more difficulty to adhere to the company vision and did not believe in Management as easily as before.

This silence impacted HR and Compensation & Benefits directly.

Our workload increased, trying to network and find information at peer companies, administering stock exercises for most in-the-money vested options, with more employees coming to us with the same questions again and again, numerous simulations and difficult conversations with managers as to why we couldn’t grant special increases/bonuses to their team members, and designing counter-offers for top flyers who wanted to leave the company.

Maybe you are thinking : “OK, but this couldn’t happen at my organization”. Really ?

Are you based in the GCC and working for a government-owned entity ? Have you never seen new decrees announced and no-one knew exactly how to interpret or implement them because they had not been socialized before ? Or are you working for a regional conglomerate ? Have you never seen decisions announced by the founder/owner that you were not sure how to execute if you were to follow instructions and abide by the law at the same time ? Maybe you are working for a multinational ? Have you ever discovered by an article on the intranet that your company had acquired another one the day before and you did not know if there would be an impact on jobs or employee compensation ?

In all those circumstances, and many more, the first reaction from the company may be to pretend. I urge you, try to convince senior executives to be open and transparent in their communication. Employees may not be happy to hear the news, but they will appreciate the honesty and will remain loyal. They will continue to trust the organization.

And if the company pretends, then be ready to take the risk and to pay the price a few months down the line.


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