I love words with multiple meanings. Tension is a great example. The combination of the words tension and work tend to have a bad connotation. But tension can also be the secret ingredient to high performing pay. Using tension properly may be just the thing you need this compensation planning season.
Webster’s first two definitions for tension include words and phrases like unrest, imbalance, latent hostility and opposition between individuals or groups. Webster also defines tension as “either of two balancing forces causing or tending to cause extension.” In physics, tension is a method of exerting force through pulling on a rope, cable or similar. Surface tension is defined as the elastic tendency of a fluid surface which makes it acquire the least surface area possible. Or, a bunch or particles pulling together to make a more resilient layer.
If you ask people to define tension they usually talk about headaches, stress, angst, and strain. These are not things you want to see as results of employee surveys! Tension is not viewed as helpful, enjoyable or performance enhancing. The challenges it creates are viewed as a sign of a poor place to work. When pay contributes to this kind of tension it is linked with high turnover, low productivity, and general discontent. This type of tension can be toxic, but tension can also mean something else entirely.
The more useful type of tension can be as magical as the tug of a helium balloon on the string in a child’s hand. It can also be equally difficult to control and similarly capable of escape. It can also be as dynamic as launching from a trampoline. Learning to use it properly takes practice, but the results can be pretty impressive. This is the tension that effectively links pay and performance. It is also the tension that links groups, and entire companies, together into a stronger, more cohesive entity.
Imagine a pay program with no tension at all. You may call this an entitlement program, or “pay for pulse.” I look at it as the kind of program where a company pays at the 40th percentile to receive 35th percentile performance. At this type of company it often seems like people have given up. People come and go without passion or purpose. The job is just that…a job. In this case, pay does nothing more than give people a slightly bigger reason to come to work then they have to stay home. It’s depressing.
A pay program with a pulling tension moves people in a specific direction. These kinds of programs are incentive plans that are designed well and have meaningful and achievable goals. The as performance improves, the goals must continue to take up the slack and maintain tension. Too often we fail to keep up and these plans become tangled loose ropes that simply trip people up.
A pay program with surface tension brings people together. A well-designed equity compensation program often serves this role. As employees are challenged to work toward a common goal, their efforts create a bond that is stronger than any job should provide. These are often companies with incredible culture and can result in alumni who stay connected for decades, even after they have moved on.
Tension is either the stress of performing on a highwire or the highwire itself, allowing you to cross seemingly impossible gaps. Designing your pay programs with the right balance of achievability and stretch, and group performance and flexibility is one of the true challenges every compensation professional must face. How have you successfully navigated this in your career?
Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture and is considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation than Dan refers to as informative written Ambien. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.