As part of a thought leadership series leading up to the 2014 Global Drucker Forum taking place in Vienna next week, author and noted business thinker Gary Hamel wrote a bitingly ironic HBR post titled The Core Incompetencies of the Corporation. In it he highlights a sample of "congenital disabilities" that plague large organizations of all types, leaving them disadvantaged in facing the winds of change and creative destruction.
Here's a quick rundown of the three "core incompetencies" Hamel notes, in his words:
Large organizations are inertial. They are frequently caught out by the future and seldom change in the absence of a crisis. Deep change, when it happens, is belated and convulsive, and typically requires an overhaul of the leadership team. Absent the bloodshed, the dynamics of change in the world’s largest companies aren’t much different from what one sees in a poorly-governed, authoritarian regime...
Large organizations are incremental. Despite their resource advantages, incumbents are seldom the authors of game-changing innovation. It’s not that veteran CEOs discount the value of innovation; rather, they’ve inherited organizational structures and processes that are inherently toxic to break-out thinking and relentless experimentation.
Large organizations are emotionally insipid. Managers know how to command obedience and diligence, but most are clueless when it comes to galvanizing the sort of volunteerism that animates life on the social web. Initiative, imagination, and passion can’t be commanded—they’re gifts. Every day, employees choose whether to bring those gifts to work or not, and the evidence suggests they usually leave them at home.
Hamel also argues that many of the fixes we toss at these problems -- he names business incubators, online collaboration, idea wikis and design thinking as a few -- are merely tweaks. Band-Aids and braces. To build organizations that are truly fit for the future requires that we go deeper and address the foundational beliefs and tenets that underlie the structures and drive the behaviors of our organizations.
What does any of this have to do with rewards? Possibly more than we realize.
An earlier Cafe article explored the notion (backed up by a case study and deep data dive) that organizations become what they reward and that pay is a critical expression of an organization's culture, beliefs and values. Are the reward practices in our organizations -- particularly some of our larger ones -- reinforcing inertia, incrementalism and insipidity? While we probably wouldn't use these words in our reward philosophy statements, it may be that these are -- in fact -- a cumulative result of some of our policies and practices.
If everything we do in compensation is communication, what signals do we send when we:
- Deliver sameness in employee rewards through our base salary opportunities, "merit" increases and even incentive pay results?
- Make it comfortable and penalty-free for employees to languish in their roles and decline opportunities to upgrade their skills and capabilities?
- Completely insulate employees from labor market messages about the value of their skillsets, particularly when that value is declining?
I understand that many of us in HR find ourselves torn between the compassion and perceived fairness of spreading reward dollars so that they touch all employees on the one hand and the tough love of using differentiation to communicate and drive the choices and behaviors key to business success on the other. Ultimately and to paraphrase compensation sages Jay Schuster and Pat Zingheim: The best way to provide a secure future for those in it is through the organization's financial success.
The way we pay has consequences, potentially enormous ones. That's what I think. You?
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force, and Managing Partner of Altura Consulting Group LLC. Believe that our organizations are what we reward and that Everything We Do in Compensation is Communication? Check out the definitive book on the topic that Ann co-authored with Cafe cohorts Margaret and Dan right here. Ann also 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 "Rolling Roadblock" by B4bees
The apt citation from Jay and Pat reminded me of what Samuel Gompers said about 100 years ago: "The worst crime against working people is a company which fails to operate at a profit."
Posted by: E. James (Jim) Brennan | 11/05/2014 at 03:04 PM