Editor's Note: One good email and a meeting will not turn your compensation plan design into reality. Margaret O'Hanlon gives us a Classic primer on implementation.
I've written a lot about implementation on Compensation Cafe, including a series that starts with this article. Why keep harping on it? Companies who are more effective at implementation are those that are most admired and deliver the highest financial returns -- I thought you'd like to know.
We in Human Resources are responsible for the implementation of pay programs, but we don't often act like we understand how to do it effectively. Pay for performance is a form of change management if we do it right. When your company's strategy shifts each year, employees' objectives and decision-making should shift, too, as well as what it takes to earn rewards.
The employees who understand this turn out to be the high potentials. The employees who understand that the goal is far out in the distance, that it keeps moving so you have to keep navigating and that their job is to shorten the distance even as the goal keeps moving. Other employees have to be reminded of this and schooled by their managers -- through performance planning and feedback -- on the role they play in implementing the strategy.
Why bring this up again? A) Research shows that most of us need all the help and prodding we can get. B) I ran into research published by a few consultants from McKinsey & Company that reveals the "Secrets of the world's best implementers." Best of all, they make it short and sweet.
Put your fingers on the keyboard and take notes. Here is the minimum that you, your leadership and your managers need to invest in pay-for-performance each year if you really want it to influence your company's financial returns. It's also the minimum you need to invest in any kind of compensation plan rollout.
Ownership and commitment in the form of time, energy and personal involvement. You'll find leaders of companies that qualify as the world's best implementers " . . . often clearing their diaries to drive efforts in a hands-on manner . . . They also role model the right behaviors . . . commonly by demonstrating the difficult act of making personal behavioral changes."
Prioritization and planning on the part of the company's line managers to ensure " . . . employees spend the majority of their time on the organization's priorities. They communicate at all levels about which actions and outcomes are the most important . . ."
Accountability using key performance indicators and tight monitoring on the part of line managers, in the form of regular employee performance assessment and feedback, scheduled at the right frequency.
Now you could look around your organization and say that McKinsey's guidelines are based on the impractical dream state common to many a strategic advisor. Or you could acknowledge that your Compensation function has its own goal, far out in the distance, that is strategically essential. Then get to work by acknowledging that you have our own performance indicators to polish up and monitor. You can make yourselves role models of effective strategy implementation by providing leadership, education on your business strategy's value drivers, compensation communications, manager training, tightened but effective monitoring and so on.
Want a seat at the table? You will always be welcome if you behave as described above and chances are, some of your leaders could use your guidance as much as the rest of the organization.
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.
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