Taking the Taking the opportunity to share some of the more popular outtakes from the eight years of Compensation Force archives. Today's featured post was first published on March 24, 2008.
When considering an organization's overall reward program, I find it helpful to look at total rewards as a portfolio of sorts. Like the elements of a sound investment portfolio, each reward element can and should be designed to accomplish a specific objective or purpose. Taken together, there should be a sense of balance in the design and interaction of the different reward plans.
To help illustrate this idea, I find that a picture like the one below to be helpful in generating good discussion about overall reward program design.
Consider, for example, the organization that retained my firm to review its current management incentive plan and make recommendations for improving it, as appropriate. After examining their plan in the context of their overall reward program, I drew a diagram like this:
All elements of their current reward program were designed to recognize and reinforce individual performance. In an organization that claimed teamwork, particularly among its senior managers - was essential to its success, this was a strategic gap. As an initial step in addressing this gap, we introduced a set of organization-wide performance measures to the management incentive plan, so that this reward element served the purpose of signaling the importance of the top team working together to accomplish organizational goals.
And then there's the case of the organization with the overloaded incentive plan. The diagram I drew for them looked something like this:
Every behavioral change and performance outcome possible was written into this incentive plan. It was as if this plan, and this plan alone, held all responsibility for steering and managing employee performance. All other reward elements had been overlooked. It was way too heavy a load for one plan to carry. Our task there was to reach a clear consensus on the one or two objectives that we could reasonably expect the incentive plan to accomplish, and to assess whether other objectives could be assigned to other elements of the overall reward program.
To make things more interesting, the diagram can be expanded on the right side to include other elements of total rewards (i.e. benefits, training opportunities, etc.) and on the left side to include other desired outcomes (i.e. skill/competency development, cultural change, etc.).
What would a reward diagram for your organization look like?
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