Editor's Note: How many of you, compensation specialists or broader HR professionals, have encountered this dynamic: the search for the pay program that will manage your people for you?
I will never forget one executive I worked with in designing (what was meant to be) a broad-based incentive plan. He agonized for weeks over the plan design, adding details and making ever more nuanced adjustments to the measures and mechanics. In our final meeting, as he was still sweating out last minute changes, it became apparent that what he was trying to create no longer resembled an incentive plan but looked more like a complex behavioral algorithm. I could see the thought bubble hanging over his head: "if I could just get this right, I wouldn't have to deal with these people and their issues any more..."
There is no keener disappointment, it sometimes seems, than when some managers discover they can no longer rely on a compensation program to manage their people for them. Try taking away an incentive plan, however ineffective or dysfunctional, from a manager who is convinced it is the cornerstone of motivating his or her staff. The level of pushback can be breathtaking.
That, of course, is because managing people is hard. Really hard. An entire industry has emerged, over time, for the sole purpose of helping us do a better job of it. Even with this, however, many managers seem loathe to embrace their management responsibilities. And certainly not when the right pay program might get them off the hook!
Can pay - and specifically incentives - ever function as a true proxy for management? Not to my mind. It is true, though, that some roles (like that of the traditional outside sales rep) do seem to function well with strong direction from a heavily leveraged (smaller base, bigger variable component) compensation plan. Although these situations are increasingly the exception to the rule, they are enough to give some managers hope that the same magic can work for them.
Under what circumstances is it reasonable to rely on pay - particularly incentives - to play a prominent role in focusing and directing employee efforts? I came up with the following short list once in working with a client. I share it here on the possibility that it could be a helpful reference to any colleagues fighting their own "pay as a people manager" battles.
(1) The position must have a very singular focus, so that it's all about doing one thing and doing it well.
(2) There must a strong, reliable performance metric(s) available which creates direct "line of sight" between the employee's efforts and the singular purpose of the position.
Very few positions meet both criteria, you say? Yes. And that was, and still is, my point.
How many of you are out there waging your own "pay as a people manager" battles? Or do you have a tale of success with this approach to share?
Ann Bares is the Founder and Editor of Compensation Café, Author of Compensation Force and 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 hiking, reading and hanging out with family in any spare time.
Image courtesy of onlineinvestingai.com
Comments