Tours of Duty and Start-Up Uncertainties

The Tour of Duty in The Alliance Framework is a commitment by both an employer and employee to completing a mutually beneficial mission objective. Generally, a Tour of Duty spans a three to five years, but the duration can vary for many reasons. The point, though, is it’s a pretty significant amount of time: the purpose is to make a big impact, and that usually takes a few years.

We advise a lot of early stage companies whose future is very unpredictable: three to six months is often the realistic time horizon anyone can think about. For both the employer and employee, there is a tremendous amount of uncertainty, and frankly, a lot of people cannot handle it.

So how do you implement Tours of Duty in such an environment, where it seems unrealistic to make commitments beyond a few months or less?

Let’s say an employee of a start-up expresses this to the CEO.

“As an employee who really wants to be part of this company’s success, I have a concern. I really need management experience for the sake of my career growth, and I’m concerned whether I will get that here.”

The CEO feels that there are too many uncertainties with the business to make any kind of commitment at this point. He really likes the idea of a Tour of Duty and wants to keep this employee engaged and committed, but he doesn’t want to make false commitments.

Is a Tour of Duty possible and is it a good idea? My answer is: definitely.

Here’s how to think through it: what the CEO can say, and how a Tour of Duty can be crafted despite the uncertainties.

1. The most important trait to the employer-employee relationship is trust, and the way you build trust is through honesty and open communication.

“I have six months to get version 1.0 out the door, and then I have three months to get another founding round or we run out of cash. That’s the reality of the situation. Everything is dependent on those things happening.”

2. Identify alignment and acknowledge misalignment, or potential misalignment. 

“We are aligned through the next few months: we both want version 1.o rolled out and to raise another round. Of course the company needs it, and it will be a career boost for you to have been a part of that success. If those things don’t happen, I realize we’ll be misaligned: we certainly won’t be in a position to hire anyone.

“I think you have potential to be a good manager and I’d be happy to give you that opportunity. I don’t know when we’ll expand staff to give you that experience, though.”

3. Suggest a realistic commitment.

“What I can commit to is this. Let’s get through version 1.0 and hopefully a successful fundraising. I will then give you some team lead experience for version 2.0.  If you’re successful, you’ll be manager material, and though I don’t want to lose you, if we haven’t grown sufficiently, I’ll help you find a management job elsewhere.”

4. Craft a Tour of Duty.

For the sake of brevity, I’ll write an brief Tour of Duty: you likely want more details in a real one.

Mission objective: Complete Version 1 (duration: 6 months); Support fundraising (duration: 3 months); Successfully lead a team for the version 2.0 release (duration: 15 months).

Results for the Company: Version 1.0 successfully rolls out on schedule; company raises next round; company has a new team lead and potential manager when needed; company successfully rolls out version 2.0.

Results for the Employee: Experiences the completion of a version release and successful fundraising; succeeds in leading a team for the next version release and demonstrates management ability.

Even in a highly uncertain situation with some formidable constraints, with honesty and open communication, Tours of Duty are possible and helpful. Of course, circumstances may make a Tour impossible to complete: indeed they can fail.

However, for both successful and failed Tours, being honorable to one another, makes you become allies. And that’s a huge win.

Finding Workplace Alignment by Exploring Misalignment

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How much alignment must exist between company and employee goals, to describe the relationship as a good fit? When does misalignment cause the company and employee to part ways? How do you prevent that from occurring prematurely?

My partners gave their answer in The Alliance: Managing Talent in the Networked Age and how a defined tour of duty can help.

By focusing on building alignment for the duration a specific mission, a tour of duty reduces the issue of aligning values and aspirations to a manageable scope.

In other words, if both company (represented by an employee’s manager) and employee strongly value the successful completion of a mission, there should be sufficient alignment per se. The misalignment that remains, becomes relatively unimportant. Yet it is still ideal to identify it, because that knowledge provides opportunities for — paradoxically — more alignment going forward.

At Allied Talent our experiences training managers lets us know that this notion can be difficult to fully comprehend, because there is often misunderstanding when managers and employees over-complicate the process when defining a tour of duty.

The fit doesn’t need to be perfect or all-inclusive. It simply must reach the criterion of being mutually beneficial.

Let me explain simply, with a non-workplace example.

At my university’s student union building, there was a bulletin board dedicated to people hoping to share rides on road trips — often back home. Let’s say Steve sees Mike’s post looking for someone to share expenses to drive home to Potomac, Maryland from Ann Arbor for winter break. Steve calls Mike and says he too is from Potomac and wants to return home for the break but doesn’t have a car and hoped to pay for half of the gas and tolls.

Some issues immediately are aired. Steve cannot leave until late Friday after his last final; Mike was hoping to leave Thursday morning. Furthermore, Steve actually is not planning to return to Ann Arbor after the break: he’s going to Italy for the next semester, and Mike was hoping to have someone to return with him.

After some negotiations, Steve agrees to drive Mike home on Friday and in exchange Mike will pay for all gas and tolls.

Also, upon learning that Steve was going to the same Italian university as Mike attended the previous year, Mike asked Steve to bring a gift to someone he befriended there.

The original thought for the mission objective did not work out: a shared round trip did not work because it was not aligned with Steve’s intention to stay in Potomac. So the two narrowed the scope of the mission to a one-way trip. There were other issues concerning when to leave Ann Arbor, and how to split expenses. These were resolved by understanding the misalignment and focusing on opportunities to align. In the end, both parties still realized gains.

Neither side gets all he desired, but by defining an appropriate mission objective, there was sufficient alignment to move forward satisfactorily. By discussing the misalignment that existed, their alignment was strengthened in one way: Steve would bring Mike’s gift to Italy.

Both Mike and Steve are highly incentivized to work together to make a success of the mission objective. They have to put trust in each other, as well. They must be honorable. Furthermore, Mike and Steve recognize that in future semesters, there may be opportunities to travel together again. Therefore, being allies, makes sense for both of them.

So the process involves, talking about where you want to go, and then delving into all the details. Discuss goals. Narrow the scope until there is enough commonality to form a mutually beneficial mission objective.

So — always take the time to discuss the misalignment. Look further to identify alignment possibilities. Negotiate. Commit to the mission objective.Then, fulfill your responsibilities honorably.

Be allies, and look forward to working together again.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

Anything But Peaceful: The Millennial “Peace-Out” Resignation

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By Chip Joyce

The companies we work with often complain of the Millennial generation’s cavalier attitude toward quitting jobs. I call it the “peace-out resignation”—and these resignations seem to come out of “left field.” The truth is these resignations are far from peaceful. The peace-out resignation is abrupt and untimely; and inevitably costly to an organization. Its roots often include a vital breach of workplace trust.

Overall surprise resignations are unsettling to a work group—often contributing to anxiety, confusion and low employee morale. For the resigning employee, the costs can be high and bridges can be permanently burned.

It is easy to assume this is yet another aspect of the negative stereotype of the Millennial. (A common response among managers.)  However, it’s dead wrong. If this is happening in your company, it’s time to actually stop and wonder why it’s happening.

Let me share a story of my own “peace-out” resignation nearly 20 years ago—when Millennials were in diapers or thereabouts.

I came in to the office on a Sunday, put my personal effects into a box, wrote a few instructions on where to find things, passwords, etc. and then wrote a screed—with probably 100 pages of supporting documentation—to explain why I was resigning, effective immediately. The reason? My manager was incredibly horrible. I had endured enough. My time with that organization was over.

I had worked for six months as a project lead. I needed guidance from my manager; questions answered. Was I doing things the right way? On the right track?

Yet for months, he wouldn’t give me the time of day.

Nothing.

Nada.

My emails were left unanswered. I couldn’t get a spot on his schedule. I was living in a workplace “vacuum.”

When I did turn in the final project, it was no surprise to me that he relayed that it was “all wrong.” He shamed me in front of several other managers, my peers and blamed me entirely for the failure. (Frankly, I believe he didn’t know what he wanted and that is why he avoided me.)

Yet the more fundamental reason that I chose to “peaced-out” was that I quickly realized I’d wasted six months of my life working for him. I had nothing to show for it—and despite my hard work, despite my dedication—I had failed.

I hadn’t increased my market value.

I might as well have spent the past six months surfing that new innovation called “the Web.”

Perhaps I was a rare proto-Millennial. Or maybe Millennials aren’t really all that different from more established employees. (I tend to think it’s the latter.)

The peace-out resignation is a protest against feeling let down or betrayed. It’s that gut-reaction to that violated psychological contract which implies that I’m going to work very, very hard to achieve organizational goals and in turn you are going to coach me and help me to succeed. When all is said and done, I’m going to achieve something meaningful and be worth more in the marketplace.

I’m sorry, but what Millennials are demanding is fair. They want to know that work is a “give and take” relationship. The problem is that it’s the rare manager who knows how to make that psychological contract explicit, open, and transparent.

Managers need training to understand both the psychological contract and the obligation to define a mutually beneficial tour of duty for each employee.

Then—they need to honor it.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

How Trust Is Often Undermined at Work — and What You Can Do About It

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By Chip Joyce

Recently I’ve had a number of conversations about The Alliance (Reid Hoffman, Ben Casnocha, Chris Yeh, 2014) and the concept of psychological contract. Employer-employee relationships are damaged when these contracts are violated — and unfortunately, they are regularly breached. You might have had yours violated. If you are a manager, you may have unknowingly violated employee contracts.

If you’re running a company, you really need to stop and consider this —  because when psychological contracts are violated, morale can be low and productivity can suffer. Good people might leave as a result. That’s an incredible shame.

You’re probably asking what is a psychological contract? That’s a fantastic question. So, here’s the short version:

Marla (our Senior Consultant) sent me an academic paper, published in 1994, titled “Violating the Psychological Contract: Not the Exception But the Norm.” It defines the psychological contract as follows: An individual’s belief regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party.

A psychological contract develops when one party believes that a promise of future return has been made (e.g. pay for performance), a contribution has been given (e.g. some form of exchange) and thus, an obligation has been created to provide future benefits. It is comprised of the belief that some form of a promise has been made and that the terms and conditions of the contract have been accepted by both parties. (Note that these are beliefs or perceptions regarding promises and acceptance.)

Each party believes that both parties have made promises and that both parties have accepted the same contract terms. However, this does not necessarily mean that both parties share a common understanding of all contract terms. Each party only believes that they share the same interpretation of the contract…. parties are thus likely to possess somewhat different and possibly unique beliefs about what each owes each other. These beliefs can arise from over promises (e.g. bonus systems discussed in the recruitment process), interpretation of patterns of past exchange, vicarious learning (e.g. witnessing other employee’s experiences) as well as through various factors that each party make take for granted (e.g. good faith or fairness).

Let’s put this in simpler terms for a non-academic like myself: a psychological contract is a promise you think you’ve mutually made with someone, whereupon you both made commitments to each other. The problem is that the other party might not see it the same way, but you’re oblivious to that consideration because you are confident it’s what was agreed upon.

It may well have been — but that’s beside the point: to you, it is fact that the promise was made.

The consequences of a breach can be severe: When employees encounter a contract violation, their satisfaction with both the job and the organization itself can decline… [as the violation] undermines the very factors (e.g. trust) that led to the emergence of a relationship.

And as you might imagine, a violation can lead to “the dissolution of the relationship itself”. Sadly, this does occur.

In other words, if your boss violates your psychological contract, you may feel let down, and may look for a new job. In this particular study, 57% of newly hired MBAs reported being unhappy within the first two years of tenure.

Here are some examples of psychological contract violations:

  • Training and development (absence of training, or training experience was not as promised)
  • Compensation (discrepancies between promised and realize pay, benefits, bonuses)
  • Promotion (promotion or advancement schedule not as promised)
  • Nature of job (employer perceived as having misrepresented the nature of the department or the job)
  • Job security (promises regarding degree of job security one could expect were not met)
  • Feedback (feedback and reviews inadequate compared to what was promised)
  • Management of change (employees not asked for input or given notice of changes as they were promised)
  • Responsibility (employees given less responsibility and/or challenge than promised)
  • People (employer perceived as having misrepresented the type of people at the firm, in terms of things such as their expertise, work style or reputation)

Instead of relying on unstated psychological contracts, which are clearly troublesome — you should develop an explicit, agreed-upon, documented, mutual commitment. The Alliance describes the process for doing this between a manager and an employee: craft an agreement called a “Tour of duty”.

The tour of duty represents an ethical commitment by the employer and employee to a specific mission. Defining an attractive tour of duty lets [the manager] point to concrete ways that it will enhance the employee’s personal brand. If and when he works elsewhere— his or her career can be advanced by integrating a specific mission, picking up real skills,  and building new relationships.

As a manager, recognize that it’s natural to form these psychological contracts. Moreover, it seems likely that they will be violated (even if inadvertently), and negative outcomes result.

The great news? You can prevent many of these outcomes, by mastering Tours of Duty.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

5 Operating Principles of the 21st Century Manager

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By Marla Gottschalk

When we join an organization today, we rarely envision a long-term relationship. In fact, we anticipate that our career path will take us to many different workplaces, with varying missions and supervision. The days of The Organization Man are long over — and when Whyte penned this 1956 classic, no one could have envisioned the forces that would impact today’s workplaces. Gone are the promises that were once made when we entered organizational life.

More than a half century later — today’s managers have struggled to keep pace with the evolution of modern organizations.

The operating social contract between employee and employer has been forced to flex significantly. Whyte’s best seller depicted a qualitatively different contract within organizations, as compared to those developing today. In that previous world of work, organizations had the luxury of offering security and a predictable future. Employee commitment was derived from — and exchanged for — the promise of career-spanning employment. Today, these promises are not often made. As such, the operating social contract becomes dependent on other elements that might prove valuable. This includes the development of alliances which contiguously advance career development and help achieve organizational initiatives.

We have been relying on an outdated foundational view of management, yet forcing its application to modern times. With dismal employee engagement figures and a recovering economy prompting turnover, the time for change may be now. We need to select, develop and support today’s managers with all of this in mind.

Here are 5 key operating principles of a 21st century manager:

  • A firm belief in transparency. If we expect employees to be transparent about elements of their work lives, they deserve the same in return. Without this aspect, the trust we desire to build will never develop. This should begin early on at the recruitment phase and continue over their tenure. This also demands the perspective that the more we can share about the critical elements of our work lives, the better we will fare as an organization. (Breaches in transparency can result in devastating consequences.)
  • A deep respect for individual differences. This requires a non-judgmental perspective concerning both work style and individual career goals. We are not all alike — and our career paths will reflect this fact. Great managers will acknowledge differences, and align our strengths with the work.
  • A practice of encouraging “connection”. This is a foundational belief that if we forge lasting connections — our work will improve dramatically. This includes embracing diversity in both opinion and perspective, each and every day.
  • A commitment to career building. Taking the above elements further, managers must be skilled at the conversations that support career growth. This involves a cache of skills which can target skill building, not only valued by the organization, but by the employee, as well.
  • A love of the job. Last, but possibly most critical — is the desire to manage others. Without a committed connection to this role, it is inevitably difficult to motivate contributors and build trust. We push too many toward the role, who do not possess the required skills or interest.

Dr. Marla Gottschalk is an Industrial/Organizational Psychologist, consultant and coach. She is a Senior Consultant at Allied Talent and also serves as the Director of Thought Leadership at Kilberry Leadership Advisors.

Photo Credit: rkit; Pixaby

Workplace Trust Is Scarce: How To Build More of It

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By Chip Joyce

“Trust is a great force multiplier” — Tom Ridge

During a break in our managerial workshop “How to Be an Ally with Employees”, we ask attendees to share stories about a challenging boss they’ve experienced, but share the story in a humorous way. We’ve had some truly funny stories shared by quite a few very talented story tellers. However, it is clear that the incidents were hurtful at the time they occurred.

Many of the attendees tell stories about one of their very first bosses. It’s critical to consider why that would occur.

One explanation, is that we tend to stop trusting managers (and organizations as a whole) after a couple of early-career betrayals. This would certainly limit our exposure to more disappointment. At the very least, we are leery to trust as time marches on, with good reason.

Most managers will tell me that their employees trust them — and some of them are visibly upset when I tell them to question that premise. “Why wouldn’t they trust me? I’ve always been truthful with them!” or “We can talk about anything—of course they trust me!” It is a difficult reality to embrace.

There are a lot of reasons why your employees may not trust you. Admittedly, most of the reasons have nothing to do with you, their present manager. The reasons they might not trust, could be related to past managers, or your manager or the manager two levels up, or what happened in the department on the other side of the building, or what happened in their parent’s career at the hand of a poor manager.

Our relationship with workplace trust is complicated. Your employees often have major trust issues before they’ve stepped through your door, and— with all due respect —you are naive, if you believe you’ll start with a clean slate.

Many managers don’t like the idea that they are not given the benefit of the doubt. They believe they deserve to be trusted unless they have broken break trust in some way. But that just isn’t the reality.

We often have to break down walls and rebuild.

A CEO told us that he was “betrayed” by his COO, who had helped him build the business for over a decade. The COO had resigned with two weeks’ notice. For whatever reason, he wanted to do something else, had been interviewing and ultimately accepted an offer. The CEO felt betrayed because the COO never let him know that he was restless and was seeking a new experience. I questioned if the CEO had explored with the COO as to why he’d never shared his thoughts. The CEO expressed that he had. The COO expressed, “I didn’t trust that you’d understand, I worried that you’d be angry, that you might simply fire me.”

That CEO assumed his COO trusted him, when in reality this hadn’t been confirmed.

Trust in the business world (as measured by the proportion of employees who say they have a “high level of trust in management and the organization” they work for) is near an all-time low. (The Alliance, Hoffman, Casnocha, and Yeh)

There is a trust deficit in the workplace. You, as a manager, need to realize that you must earn each employee’s trust. You need to demonstrate that you are in fact a counterexample to this widespread crisis of mistrust.

Here are a few ideas to explore:

1. Put trust on the table. Share a story about how a manager may have betrayed your trust. Describe your emotions at the time, how you handled or mishandled it and how it affected you. Acknowledge how it made you more wary of trusting managers, or whatever is true for you.

2. Discuss widespread mistrust in the workplace. Express that you take this very seriously because of the interference with not only the success of the business and careers, but also with relationship building among coworkers.

3. Explore experiences. Ask your employee about their own history with managers and whether they felt their trust had been betrayed. (Be sure to practice active listening skills). Accept what you hear as gospel and exercise empathy.

4. Acknowledge that trust is earned. Discuss that trust is built upon mutual plans together, with each side recognizing commitments to one another. Then follow with another plan, and another—with each completed plan layering a foundation of more trust.

5. Capture the dynamic. Structure these plans within Tours of Duty, as described in The Alliance.

Chip Joyce is the Co-Founder and CEO of Allied Talent. He brings the Alliance Framework to organizations worldwide.

Photo Credit: morgueFile

Employee Compensation and The Alliance

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By Reid Hoffman, Ben Casnocha, and Chris Yeh.

Mutual benefit is the fundamental characteristic of an alliance in the workplace. Ideally, by working together, the employee transforms his career and the company transforms its business.

When an employee evaluates what he or she stands to gain in this alliance, the cash and equity compensation the company offers should be one of the benefits. But it should not be the dominant benefit.

Cash compensation and equity is part of the employee’s financial capital. In contrast, our book The Alliance focuses on how the company will help increase the employee’s human capital by making him more valuable and employable through acquiring important skills, experiences, and connections.

These “soft assets” (as we referred to them in The Start-up of You) accrue as the employee pursues and accomplishes his mission, and enable career growth in a way that simply making more money cannot. The smart long-term strategy for an employee is to optimize on building up human capital instead of optimizing for maximum short-term cash: unique skills, powerful experiences, or a deep professional network. These assets have a longer-term pay-off if leveraged well.

The company also wins when employees develop soft assets, of course. Employees who have up to date skills and networks do better work on the job.

One of the ways a company and employee organize the soft asset plan is by committing to a “tour of duty” that has a meaningful mission objective. An example mission objective could be a product launch or scaling some initiative to a certain level over a finite time period. There’s mutual benefit here, too. For the company, employees who commit to a tour of duty because of a meaningful mission will outperform those who are simply seeking cash-for-time. For the employees, they will be most happy and fulfilled if they’re involved in meaningful, high-impact work. Various research on employee engagement and employee happiness support these claims. In Silicon Valley, we call it having “missionary” rather than “mercenary” employees, and our innovation culture depends on it.

All this said, to ignore cash compensation in the context of the alliance is foolish. Regardless of how much they love their jobs or how meaningful the mission, most people would quit instantly if they were told that from now on, they wouldn’t be paid. Soft assets are critical for long-term value, but you can’t use them to pay the mortgage.

In a separate but related conversation to the tour of duty conversation, the manager and employee discuss the compensation package, which generally includes a salary or hourly rate, and might also include things like healthcare, 401k matching, and incentive compensation. The most common incentives include stock option or RSU grants, which vest over time, and bonus plans, which are calculated annually. Salespeople also often receive a commission based on how much they sell. In larger organizations, the broad structure of employee compensation tends to be set, for scalability reasons; personalization and negotiation between manager and employee happens within that structure.

All of these compensation systems serve the goal of alignment. Just as an alliance should align the interests of employee and company by providing the opportunity for soft asset growth and a meaningful mission, the compensation system should align the cash compensation with the value created by the employee accomplishing the mission. Ideally, monetary compensation gets adjusted up or down based on performance over the duration of a tour. Typically, monetary compensation (salary, bonus or long-term incentives like stock options or RSUs) is reviewed annually to allow for some adjustment and alignment. With more meaningful and honest 1:1 conversations between managers and employees, which we espouse in The Alliance, employees can better understand what they make and how they make it.

In the end, no compensation system is perfect. How many of you think that you are paid exactly the right amount? The alliance doesn’t change that fact. What it does do is to help a manager build a stronger relationship with your employees by contextualizing compensation details in an intelligent, more general career conversation.

Below are some additional frequent questions we’ve received about the Alliance and compensation.

Q: I’m an individual manager. I don’t fully control compensation for my employees. How should I deal with compensation when I lead a career conversation with one of my team members?

A: Individual managers can face constraints when negotiating compensation with employees. Oftentimes, HR sets and enforces a company-wide compensation policy or management enacts budget constraints that curtail compensation increases across the board. Still, managers have the ability to tout their employees’ accomplishments and almost always exercise some level of discretion. Furthermore, managers should focus on the elements of compensation that they do completely control. For example, you can still help your people grow their soft assets. As a manager you can define a mission that aligns well with the employee’s aspirations and values and which helps advance his career. On an ongoing basis, you can help the employee acquire useful knowledge and skills, build his personal network, and burnish his personal brand with speaking and thought leadership. This is true even if your organization doesn’t adopt the alliance framework!

Q: Should the company pay a “loss of optionality” bonus for the employee if he’s taking himself off the job market during his tour of duty?

A: The alliance framework does not imply there should be a special “loss of optionality” bonus for an employee who signs up for a tour of duty. But it does imply that there should be a vigorous, honest discussion between manager and star employee about the nature of their commitment to each other.

By signing up for a tour of duty, both company and employee gain short-term and medium-term predictability. This is what lets both sides invest in each other with confidence over the course of the tour. As such, even though this isn’t a legal agreement, breaking the tour of duty commitment represents an ethical violation.

Of course, talented employees will always be sought after by other companies, and sometimes employees will come upon a truly transformational career opportunity at a different company that would justify them ending their tour with you early.

As a manager, you should aspire to get to a place where your employee will talk to you first before seriously exploring alternative career offers in the middle of a tour. After all, if an employee is so unsatisfied or uninspired on his current tour that he feels compelled to be interviewing elsewhere, better for you to know about it as early as possible so you can potentially redefine the tour of duty, redefine the relationship into a short term, month-to-month transitional one until a new tour can be defined, or help the employee amicably transition out of the company altogether. You earn this “right of first conversation” by showing the employee that you’re truly committed to his career transformation and not simply motivated to keep him at your company as long as possible.

As a manager, be specific with your employee on how your alliance deals with certain tactical scenarios, such as interviewing elsewhere during a tour. For example, is it acceptable for the employee on a tour of duty to answer the phone when a headhunter calls? Is it acceptable to take a day off to interview at another company if the employee is already on a long-term commitment with his current employer? The manager and employee need to arrive at a mutually agreeable decision on this and other potentially sticky situations. While managers may be tempted to consider any contact with another company as a violation of the ethical pact, keep in mind that one way an employee can better understand his market value and the quality of his current career opportunity is by talking to other companies, so to explicitly bar that activity would not be in the spirit of the alliance. Different managers may have different standards, but all managers should be clear about expectations.

Q: If a tour of duty’s mission lasts multiple years, should compensation be set for multiple years? Why set compensation annually?

A: Today’s compensation systems, with stock option and RSU vesting, 401k match vesting, and so on already reward employees for staying over the long term. These kinds of systemic, standardized incentives are good because it does make sense to think about compensation in the context of long-term missions.

That being said, even if a tour of duty is expected to last more than a year, we suggest regular check-ins and tweaks as necessary. The goal of the tour of duty framework is to provide greater adaptability; locking in compensation could lead to a misalignment of compensation and responsibilities. In this sense, re-visiting compensation on an annual basis is not necessarily at-odds with a long-term tour of duty.

Q: In a classic compensation negotiation, there’s information asymmetry between employer and employee. The company has access to all the company’s compensation records in addition to market data from commercial providers. The employee meanwhile doesn’t even know what his co-workers make, let alone broader market trends. Doesn’t this information asymmetry erode the trust that’s necessary for the alliance framework?

A: Indeed, transparency and honesty are necessary for a true alliance.

Companies should be transparent about how they determine compensation (while preserving the confidentiality of other employees). Managers should share the data they’re relying on to determine compensation benchmarks. If candidates and employees expect companies to be open with them, then they should be ready to reciprocate by being open about their compensation history, competitive offers, and the information they’ve gathered through their networks and readily available reported data.

As we put it once in an interview, the ideal scenario is for both parties in a compensation negotiation to show all of their cards to each other, thus cooperatively determining the fair market rate as effectively as possible.

By framing this negotiation as a puzzle to be solved, rather than a battle to be won, both parties can work together, rather than at cross-purposes. Of course, at the end of the day, you do have to set a final number. The goal is simply to find a number that reflects the mutuality of a transformative alliance.

Q: How do I handle compensation when introducing the alliance to current employees who are already on an undocumented tour of duty?

A: For existing employees who are not on a defined tour, we recommend that you introduce the tour of duty process by defining the non-compensation benefits to the employee—the human capital gains around skills, experiences, and connections that can lead to career transformation—and leave the current monetary compensation system in place. This reduces uncertainty for both company and employee.

When it is time to define an employee’s next tour of duty, you’ll have the opportunity to work compensation into the discussion. In most cases, milestone- or achievement-based incentives will best align the interests of the employee and the company around accomplishing a specific mission. Transform the company, and be rewarded–that’s the kind of compensation that helps attract entrepreneurial employees.

This post was co-authored with Ben Casnocha, and Chris Yeh. To continue the discussion with us on this topic, please join our LinkedIn Group.

Photo: morgueFile