Editor's Note: In our efforts to make our reward plans more agile, more responsive, more strategic, we do well to study and draw lessons from our colleagues in the strategic planning field. One classic business strategy tool is the S.W.O.T. analysis. In this Classic post, we look at how this process could be applied to a review of our reward plans.
In their guest post here at the Cafe, Keystone Award winners Jay Schuster and Pat Zingheim called attention to their research on the experience of large, challenged financial institutions and some of the troubling realities it exposed about the state of total reward practice today.
I've been reflecting on one of their findings in particular, that the reward (and HR) professionals at the troubled institutions were not prepared to respond to crisis, and that the programs they had put in place appeared to be positioned for good times only and had little capability to add value when confronted with adverse circumstances.
I am going to guess that this is a weakness in many of our plans and practices. It certainly represents an "opportunity for improvement" for me in supporting the organizations I serve - whether it's helping them better prepare their programs for any general economic turbulence that may lie ahead or planning for any unique twists and turns their own industry may experience. In considering some of the methods and tools that might help incorporate this kind of planning into reward strategy work, I've been spending time reading up on a topic that seems to offer some interesting possibilities: SWOT analysis.
SWOT analysis, for any who may be unfamiliar, is a planning method typically used in business strategy to identify the Strengths, Weaknesses, Opportunities and Threats that may face a business or project. The graphic depiction of the SWOT analysis model below comes courtesy of Wikipedia.
A number of us have likely had the opportunity to either observe or participate in this exercise for the broader business in which we work. A quick overview of the core concepts:
Strengths and weaknesses are internal to the organization. Strengths represent positive attributes or characteristics, factors that provide an advantage. Weaknesses are attributes or characteristics that place the business at a disadvantage relative to others.
Opportunities and threats are external to the organization. Opportunities represent external trends and chances to improve performance - something happening in the outside environment that presents positive potential. Threats are elements or trends in the outside environment that could cause trouble for the business, place it at risk.
How to apply SWOT to reward planning? One logical approach would be to piggyback on to the SWOT analysis for your business, and assess the connections and possibilities that exist between your reward program and your organizational strengths, weaknesses, opportunities and threats. Asking questions like these:
For Strengths: Is your reward program designed to capitalize on and sustain these strengths - particularly as they relate to worker skills, capabilities and desired performance outcomes? If not, how might we make adjustments to accomplisht this? Are there reward practices and plan elements in place that might serve to undermine these strengths over time? What can be done to address those potential issues?
For Opportunities: What must the organization do to capitalize on these opportunities? Does the current make-up and design of your reward "portfolio" provide enough focus and momentum to reinforce these efforts? If not, what types of adjustments to which elements might provide the additional "oomph" necessary to propel action?
For Weaknesses: Are there any reward program practices or elements that are reinforcing or prolonging any workforce attributes, characteristics or behavior patterns that can be linked to these known weaknesses? What can be done, and how quickly, to put the necessary changes in place?
For Threats: What implications do these threats have for the organization's talent base? Are there reward practices or elements that are making the organization particularly vulnerable to the damage these threats could inflict - or which might hamper the organization's ability to respond and adjust course to minimize risk? Are there efforts that could be driven, capabilities that could be developed, which would help the organization mitigate the risk from these threats? If so, could reward plan changes remove barriers and provide encouragement to that end?
Anyone out there who has tagged on to an organizational SWOT analysis in this manner and who could share their experiences in doing so? What approaches have you used - or seen others use - that could promote better planning and help position our reward programs to deliver business value in bad, as well as good, times?
Ann Bares is the Editor of Compensation Café, Author of Compensation Forceand Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.
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