Why does compensation matter? It’s an obvious question, with an obvious answer (or multiple ones), but it can also quickly devolve into a philosophical exercise. Today, I’m interested into delving into the employer perspective. Yes, compensation is a contractual agreement with the employee: X amount of pay for Y amount of work. But it can (and should) be so much more – especially when we think of compensation in the broadest of terms as inclusive of the Total Rewards package. In this context, compensation can be an integral element of how you focus employees and communicate to them your strategic goals.
Take, for example, the lesson below from Don Knauss, chief executive of Clorox, shared in a recent New York Times “Corner Office” column:
“One thing I learned very quickly was that there’s a head part and a heart part. The head part was, how are you going to focus the organization? And it had better be simple, and it probably should not be more than three things. You’ve got to communicate it about 100 times and align your incentive structure to it. It’s about distilling the complex to the simple, and I’ve seen leaders fail because they do the reverse, by trying to make things into some intellectual exercise. Whatever business you’re in, there are fundamentals, just like blocking and tackling in football. It always comes back to the fundamentals. You cannot let yourself get bored with the fundamentals.” (emphasis mine)
Every employee has their own tasks to accomplish, but those individual tasks are all designed to help achieve the strategic mission and objectives of the organization. The trick lies in helping employees understand this and – more importantly – fully engage by giving their best effort every day to achieve those objectives.
How do you do this? Mr. Knauss lays out a three-step roadmap:
1) Focus – Nobody can focus on 10 critical priorities and give the same attention and excellence to all. Narrow down the priorities to no more than three things that can be easily understood by everyone. This doesn’t mean your priorities must be simple, but they must have a context everyone can buy into and contribute to achieving. Think of story of the NASA janitor who, when asked what he was doing while cleaning mission control in 1969, didn’t reply, “I’m sweeping the floor.” No, he understood the priorities and replied, “I’m helping put a man on the moon.”
2) Communicate – An annual goal-setting meeting or a pretty plaque on the wall are never enough to help all employees understand their role in achieving the mission. Of course, communication must happen specifically and often. But don’t put this burden solely on the shoulders of your people leaders. Give all employees permission to notice and acknowledge when others around them are contributing as well.
3) Reinforce – Use every instance of positive reinforcement, incentive, or recognition to drive home your key areas of focus. Think for a moment about all forms of incentives in your organization – long-term incentives, bonuses, short-term contests, on-the-spot recognition and, yes, base compensation (after all, what are you giving employees raises for?). Are you taking full advantage of every moment to specifically remind recipients and others of why these rewards, reinforcements and recognition moments are being given? Every instance is a golden opportunity to once again communicate priorities and drive deep focus on what matters most.
How is compensation used in your organization to focus, communicate and reinforce employees on your organizational priorities?
As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin, Montreal and Boston. Follow Derek on Twitter at @DerekIrvine.