Are You Using Pay as a People Manager?

You've witnessed this yourself, I expect, dear reader.  There is no keener disappointment, it often seems, than when managers discover they can no longer rely on a compensation program to manage their people for them.  Try taking away an incentive plan, however ineffective or dysfunctional, from a manager who is convinced it is the cornerstone of motivating his or her staff.  The level of pushback can take even seasoned HR/compensation professionals by surprise.

That, of course, is because managing people is hard.  Really hard.  So hard that the last decades have seen an entire industry emerge for the sole purpose of helping us do a better job of it.  Even with this, however, many managers seem loathe to embrace their management responsibilities.  And certainly not when the right pay program can get them off the hook!

Can pay - and specifically incentives - ever function as a true proxy for management?  Not to my thinking.  It is true that some roles (like that of the traditional outside sales rep) do seem to function well with strong direction from a heavily leveraged (smaller base, bigger variable component) compensation plan.  Although these situations are increasingly the exception to the rule, they are enough to give some managers hope that the same magic can work for them.

Under what circumstances is it reasonable to rely on pay - particularly incentives - to play the prominent role in focusing and directing employee efforts?  I came up with the following short list in working with clients.  I share it here on the possibility that it could be a helpful reference to any colleagues out there fighting their own "pay as a people manager" battles.

(1) The position must have a very singular focus, so that it's all about doing one thing (perhaps, potentially, in exceptional cases, a couple of things) and doing this well.  No broad set of responsibilities, no potentially competing priorities, no complexity.

(2) There must a strong, reliable performance metric(s) available which creates direct "line of sight" between the employee's efforts and the singular purpose of the position.

Very few positions meet both criteria these days, you say?  Yes.  And that would be my point.

I know many of you are out there waging your own "pay as a people manager" battles.  What perspectives, advice and stories could you share?

Creative Commons image: "bonus picture" by WhiteThesis