To Innovate in Rewards, Get Outside the Rewards Profession

There appears to be general agreement among reward professionals that the compensation approaches and protocols which have dominated practice for the last few decades are ripe for reinvention.  That disruptive change in the field is necessary and inevitable.

I also sense an assumption that we will be the change that we have been waiting for.  That we will lead the revolution, just as soon as we get those year-end budgets and plan changes completed and find the time to get our innovation game on. 

Not sure it will pan out that way.

A recent article in The Atlantic Why Experts Reject Creativity takes a close look at the bias we all have against new ways of thinking.  Senior Editor Derek Thompson asserts that not only are our brains hard-wired to distrust creativity, but that the more knowledge and expertise we have on the subject, the more hostile we are to new approaches.  And he highlights a number of research studies that support his claim.

In one study, 142 world class researchers from a leading medical school were randomly assigned to evaluate proposals for research funding.  Sometimes the faculty were experts in the subject matter being considered, sometimes not.  The experiment was triple blind, so that evaluators didn't know submitters, submitters did not know evaluators and evaluators did not talk to one another.  What the researchers found: New ideas -- those that "remixed information in surprising ways" -- got the worst scores from everyone, but were particularly punished by experts in the subject matter.

Thompson goes on to demonstrate that, in reality, most of us dislike new ideas, regardless of what we say or believe about ourselves.

A 1999 study found that teachers who claim to enjoy creative children don't actually enjoy any of the characteristics associated with creativity, such as non-conformity. A famous 2010 study from the University of Pennsylvania showed that ordinary people often dismiss new ideas, because their uncertainty makes us think, and thinking too hard makes us feel uncomfortable. "People often reject creative ideas even when espousing creativity as a desired goal," the researchers wrote. People are subtly prejudiced against novelty, even when they claim to be open to new ways of thinking.

Which means that disruptive change, innovations that move the field of play and introduce new compensation management solutions, will quite likely originate outside our profession.  It will come from business leaders and others with talent management smarts (but perhaps not the "credentials") -- particularly (but not exclusively) those in emerging and fast-growth organizations and industries -- who are willing to experiment, put new ideas to work and learn from their efforts.

It will happen out at the edges and beyond, outside the perimeter of "professional" reward practice.  And so our mission, if we choose to accept it, will be to discover, devote attention to and learn from what is happening outside the core of our field.  And then to bring those ideas in, adapting and piloting them in our own organizations.

A few years ago, I had an interesting conversation with a couple of key leaders at our own esteemed professional association.  I shared the observation that all of the Association's focus and attention was centered on very large organizations, the Fortune 500 and their ilk.  I was informed that this was the case because it is at these big employers that the leading edge of reward practice takes place.

Disagree.

To paraphrase the wisdom of Gordon MacKenzie, author of Orbiting the Giant Hairball: A Corporate Fool's Guide to Surviving with Grace (and only the best book on business creativity every written!), we won't be able to truly push the boundaries of practice until we figure out how to escape the Hairball -- our entanglement with the policies, assumptions and practices of the past.  Orbitting -- escaping the gravitational pull of the Hairball enough to observe and embrace original ideas and lessons -- will require that we read and interact outside the boundaries of our profession. 

Irritating, inconvenient and messy, for sure.  But that's what the road to discovery typically looks like.

That's what I think.  You?

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force,  Managing Partner of Altura Consulting Group LLC, and a proud co-author (along with Cafe cohorts Margaret and Dan) of the newly published book Everything You Do in Compensation is Communication.  Ann serves as President of the Twin Cities Compensation Network (the most awesome local reward network on the planet) and is a member of the Advisory Board of the Compensation & Benefits Review.  She earned her M.B.A. at Northwestern University’s Kellogg School, is a foodie and bookhound in her spare time. Follow her on Twitter at @annbares.

Creative Commons image "An Idea" by aloshbennet

Comments

[E. James (Jim) Brennan]

Agree that new ideas and revolutionary concepts rarely originate at big employers. They usually are deeply invested in traditional precedent and exhibit "lemmingitis" at best. In bureaucracies where office politics thrive, innovations are threats that can disrupt career advancement. Only after small agile shops succeed dramatically after taking such risks do the dinosaurs scramble to play catch-up with slam-dunk implementation efforts to emulate the new leaders.

Examples abound, such as Prof. Dan Ariely's utter failure to persuade a giant financial institution to relocate honesty pledge signatures from the bottom of their form to the top. His extensive experiments proved that the psychological commitment increased by orders of magnitude when "I'll be honest" decision points appear at the top of the form. But it was new and different...

[Jacque Vilet]

Something new and different might begin at a start-up, especially if there is no HR person on board. However, even then the founders may want to use plans/programs they are used to from working at their former employers.

[Blaine]

Have some innovative comp and benefit ideas
come from the outside? Not sure if I know of any. I've worked for a very big company that looked for innovative ideas. Hard to generalize.

[Ann Bares]

Jim:

Dan Ariely's example does make an intriguing point about the difficulty of doing "new and different" in a large organization. Not to say it doesn't happen - just that it doesn't typically happen easily.

Jacque:

Agree that what you often run into at start-ups and emerging organization is an interesting hybrid of something new/different with an element of a plan from past experience. Sometimes these "mash-ups" reflect an important stepping stone along the path to new ways of doing things.

Blaine:

Fair point - that there's peril in generalizations, and there are certainly exceptions to the point I make here.

Ideas from the "outside"? As one example, look at all the experimentation with pay transparency that is happening in newer/emerging companies where the founders are committed to doing things differently. The bleeding edge of pay transparency is happening at young organizations who don't have the "albatross" of a long compensation history hanging about their necks.

Thanks all for the comments and observations!

[Blaine]

Pay transparency (salaries are public information) has been in existence for many years (over 10 years at least in Michigan) in state universities in several states. I don't think they qualify as "newer/emerging companies." No original thought there with this idea. Perhaps you have other cutting edge ideas, rather than recycled old ones.

[Ann Bares]

Totally right, Blaine. Public sector salaries have been public information for longer than that. I was referring (but wasn't being specific) to the private sector. Many of my colleagues and friends who work in large publicly traded companies are watching what is happening in emerging companies like SumAll (which, along with others like it, has been written about here) to see what lessons they can take from these "upstarts" to help them on their journey toward more pay transparency.

We've written about a number of upstarts here at the Café, trying out new approaches and methods. Many of these, for those of us who've been in the trenches for a long time, do appear to be new versions of ideas and practices that have been around for decades - but have fallen out of favor or faded away. Sometimes innovation - I think - comes from reimagining how we can apply old principles in fresh new ways. I can also appreciate how this would appear to be "recycled" old stuff to many.

I appreciate your interest and passion in debating this. Part of our mission here is to put out a provocative idea or point - and see how it holds up to debate with our fellow professionals. Often this leads to a guest post by a reader who has an opposing viewpoint that they'd like to share with Café readers. Would you consider a guest post challenging my assertion about innovation coming from outside the profession? I'm betting that there are some strong cases of big company innovation that could serve as a compelling counterpoint to my post!

[Margaret O'Hanlon]

Ann and others. Great topic! Innovations that I am hoping for (that can come from the outside in) involve applying current social science research to our compensation practices. The example that I like to use is the findings on gaming that apply to equity. Participants are not motivated by a long term long shot like equity, as much as by the payoff, when it comes. Then they feel they've been given a gift, and owe the gift giver (their company) their gratitude.

Findings like this, and there are many, should influence our plan design and messaging, but they haven't yet. Shame on us, because there's lots of solid findings out there that we should be discussing and using to innovate (with research to back it up).

[Ann Bares]

Margaret:

Thanks for the great observation! We could certainly do much better in applying current social science research findings and lessons to our work. Part of the challenge - I think and as I've noted here before - may be that few of us are confident in our ability to accurately decipher research papers and journal articles in order to extract the "real world" insights that can help us do our jobs better. We could benefit by better direction and guidance to know where to find and how to apply those lessons!

[Shawn Miller]

...and this gets us back to the middle of ... The Hairball!

Habits die hard, change is difficult and is only achieved through doing things differently.

Perhaps we need to make a concerted effort to "Start with the end in mind," commit to breaking away from the Hairball on a regular basis and pop our heads up to see what's happening outside the box....

[Ann Bares]

Shawn:

Great observations and advice for all of us - thanks!