Compensation plan takes mystery out of what employees are paid

BOULDER — John Odbert’s first job out of trade school was enough to drive him back into the halls of academia.

His machinist position at a Michigan firm was a virtual nightmare because of poor management and a lack of focus on his employer’s part.

“I never had a clue as to what I had to do to earn more pay,” he recalls, “and I never knew what I was accountable for or how pay decisions were being made about my future. Because of that, I never felt like I was as effective as an employee as I could have been.”

These days, Odbert strives to make sure other workers don’t have similarly dark experiences. Since 1988, Odbert and his consulting firm, The Odbert Group, works to correct the ills we’ve all endured at one company or another.

His main weapon in this campaign? A program he calls “dynamic compensation,” which restructures a firm’s payment methods, increases productivity among employees, and fattens up a company’s bottom line.

“We see three or four major problems when we go in to look at a company,” notes Odbert, a former vice president at Celestial Seasonings, “and the biggest one is traditional pay, where employees think inflation or years of service are what create their success.”

Because of this way of thinking, “every employee gets an entitlement mentality — they read that inflation went up 3.8 percent, their hands go out and they say, You owe me 3.8 percent.’ But inflation doesn’t have a thing to do with the kind of services these companies provide to their customers.”

According to Odbert, the majority of businesses have pay scales that are arbitrary and vague, with workers confused by what the scale is and how it works. To remedy this situation, Odbert and his five partners set up clear-cut plans that remove the mystery and make sense to employees.

“Usually, for the first time in their life, the employee knows in advance what they’re going to be rewarded on six to 12 months down the line. For most employees, that in itself is the most earth-shattering discovery that will ever hit them. If you went into any company in Boulder today and said, Hey, do you know what’s going to be used to determine your financial success over the next 12 months?’ they wouldn’t have a clue.”

Employees are then given a pay range expectation for particular jobs and guidelines on how pay will be determined in the future. They also participate in their own performance evaluations.

“There are no secrets, no mystery, no black boxes,” Odbert says. “No three people are locking themselves in a room on Dec. 28 and throwing darts at a board. We find that when things are on top of the table instead of under it, there’s a built-in accountability, and that everybody gets treated fairly.”

A second part of Odbert’s program involves clarifying the roles of each employee, so he or she can more clearly address job goals. Managers are trained to provide feedback to all staffers on how they are performing and what they can do to improve performance.

“We get rid of the things that are making people dissatisfied and get them focused on the things that get them really excited,” Odbert says.

Does this make a company more productive? “Extremely,” Odbert says. “We just finished a project in Silicon Valley where the company’s sales more than doubled, and they didn’t have to add any employees to do it. Before we came in, everybody was just doing what they intuitively thought needed to be done. When we got through, everybody understood what their piece of the action was.”

“The vast majority of people in the world,” he adds, “get up every morning and want to do the best job they can for their employers and themselves, because there’s a great satisfaction in doing good work, work that has meaning and purpose.”

The Odbert Group’s clients primarily are technology firms that produce or distribute products. Many are in need of landing and retaining skilled employees, “Dynamic compensation” helps meet these goals, Odbert says.

“It makes it easier to attract better employees,” Odbert says, “better employees like a system that’s open, where they can better control their success. And with better productivity, employers can put more in the bank, share it with shareholders, give their customers lower prices and give some back to the employees in better wages.”

The cost of the Odbert Group’s services varies, depending on the size and type of business and the number of employees. A recent project for a firm of 20 cost $20,000, while a larger endeavor may exceed $100,000.

“Typically, the average company gets their money back in six months or less,” Odbert claims, adding, “but the thing to remember is that it’s hard work for the company to implement this — we’re talking about a culture shift here. Now, every employee has a results-driven job specification in hand that talks about their accountabilities and how they’re going to be measured. Getting that kind of document for four or five hundred employees is a lot of work.”

Leslie Bohm, chief executive officer and founder of Catalyst Communication, a Boulder advertising firm that works almost exclusively with bicycling makers and retailers, took on the task of employing Odbert’s plan for Catalyst’s 18 employees.

“What John’s system does,” Bohm says, “is create a structure that better calibrates reasonable compensation.” According to Bohm, “Employees love it. It’s attractive to new employees, because it shows them that this is a place where you get paid for what you do, where they’re going to have clear objectives and what the pay is for meeting those objectives. People want to know.

“It’s particularly useful for highly motivated, high-productivity employees,” Bohm says.

Is it worth the price? Bohm says it’s definitely worth every penny.

The Odbert Group’s efforts have caught the eye of General Electric, which recently purchased Data Storage Marketing, a Boulder computer and hard drive manufacturer and Odbert Group client.

“They’re going to hire me to do some more work, and that’s a pretty nice compliment. People from GE come to little podunk’ Boulder thinking, Boy, I bet these people have a screwed up pay system,’ and then they take one look at it and say, Holy smokes, this is better than what we’re doing.’ That’s kind-of a nice testimonial.”