Variable Pay Is a Two-Way Street

“The heart of influence lies not in our fancy powerpoints or elegantly crafted talking points.  Ironically, paradoxically, it lies in listening before we talk. . . Not all truisms are true, but this one is:  People don’t care what you know, until they know you care.”

Wise words as ever, from our Trusted Advisor, Chuck Green.  What do they have to do with variable pay? 

Saturday night I had dinner with a long-service manager from a prominent high tech company.  The conversation turned to health care benefits and pay, as it seems to do these days.  At one point he told the table, with a laugh, that he has gotten huge bonuses (multiples of his salaries) and limited bonuses, and he never knew what management was trying to tell him. What exactly was he doing that had such a powerful impact, or a lesser impact, in these years?

Incentive pay is a high visibility discussion topic right now

Ann Bares and Darcy Dees have just given us fine insights into incentive pay’s complexity and the importance of clear messages to employees. Let’s face it, though, money or any other type of incentive cannot influence behavior unless you:

1. Specify the behavior(s) you want to influence
2. Build understanding of the impact of the behavior(s), so employees care about them 
3. Can predict, and rely on, how the employees (whose behaviors you want to change) will react when they earn the incentive.  Will they navigate towards those behaviors again?

How many companies can claim to be good at this?

A big part of the challenge is that incentive plan design has so many moving parts.  “a + b = c” is basic algebra, but straight algebra hardly ever works when it is important to illustrate the dependencies in a Region’s or Division’s work processes.  I have frequently communicated tiered incentive plans, and I’ve always wondered how anyone could hold the formula in their minds for any length of time (even though these plan designs have critical messages to send). 

Yet, how often have we treated incentives as a two-way street? 

Do we research whether employees are actually influenced by the design we’ve developed, and will continue to be influenced even after the incentive has been paid?  Do we check to see whether managers and employees are chatting about their progress, and whether employees are connecting “a “with “b“?  Do we check to see whether employees really trust that “a + b” will get them to “c”?

I bet we could get better at this if we listened to employees talk about incentives. Tried to really understand what will earn their trust and focused effort. (Determine whether Daniel Pink's ideas have any merit, rather than guessing.) Then employees will know that we care, and care to learn what we know about achieving company success.

Margaret O’Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communication to the dialogue at the Café; before founding re:Think Consulting, she was a Principal in Total Rewards Communications with Towers Perrin.  Margaret earned her M.S. and Ed.S. in Instructional Technology at Indiana University.  Creative writing is one of her outside passions.

 

Comments

[Doug Sayed]

Bravo Margaret and Darcy for a wonderful two-post philosophical discussion of incentives and better ways to think about and practice the craft of creating, communicating and implementing effective incentive programs.