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07/13/2012

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The speed and precision of that clear feedback is also essential for pay to play a directive role in behavior. Packers paid on a piecework rate, buskers working for contributions, servers depending on tips, bloggers paid per hits and even athletes paid for hits and baskets and other types of scores illustrate the limited relevant environments where the most fertile pay-directing conditions exist.

Elliott Jaques's Time Span of Discretion is a vital operative factor in pay-driven behavior. Witness the obvious inverse relationships between the time period from action to confirmation that your action was right and pay amount: consider commissioned telemarketers and CEOs. In general, the faster the feedback, the lower the compensation, because the work outcomes are simplified and performance is self-correctable. Complicated work does not lend itself to such mechanistic management.

Good points, Jim and helpful examples. The Time Span of Discretion is also an important reference for these questions. Thanks!

Ann

While this should come as no surprise to anyone, compensation systems will never be a true proxy for good management. It's a tool for reward and recognition, but without competent management using this tool effectively its power is substantially reduced.

Similarly, incentive programs need to be understood by the participants in order for them to function as incentives. I know I'm stating the obvious, but more than once in my experience incentive plans which were so complex that nobody really understood how they worked actually acted as a dis-incentive; extra money just showed up in peoples paycheck and they had no idea where it came from or why it was awarded, which demotivated those who failed to receive the 'manna from heaven'.

I believe the future of compensation will be increased transparency, which I also believe to be a good thing. Getting compensation out of the closet will ensure that the reward and recognition system will be truly responsive to the participants, and achieve the results they were designed to achieve.

JB

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