By Claudine Kapel
What do your pay programs deliver?
The obvious answer is that they provide monetary compensation, such as salaries and bonuses.
But they also deliver messages.
They reinforce what’s important to an organization through what they emphasize – and what they reward.
At their heart, pay programs are powerful communication vehicles. Performance measures and standards that influence how rewards are allocated also tell the story of the organization’s priorities and what it is trying to achieve.
And pay delivery brings these stories to life, reinforcing key messages by delivering rewards for a job well done.
Whether the objective is to achieve production goals, meet sales targets or stay within budget, employees will focus their attention on the performance expectations and desired outcomes articulated or reinforced through pay programs. And that can be a blessing or a curse, depending on how effectively pay programs are designed and managed. Because when pay programs deliver messages that are unclear, inconsistent – or misaligned with broader organizational imperatives – they can actually undermine organizational performance.
For example, a mixed message can arise when an organization says team work is important – but then delivers monetary rewards primarily based individual contributions and results. Or when the organization lavishes recognition and rewards on an individual who is clearly not a team player.
Sometimes organizations can fuel inefficiency and discord through performance expectations that inadvertently pit one department against another. This can happen when objectives and messages regarding the importance of sales and service are not effectively balanced.
For example, sales people may be encouraged to do whatever it takes to close sales and achieve revenue targets. This can contribute to more robust salary increases and incentive awards for a variety of different positions.
But it can also lead to commitments being made to customers regarding delivery dates, product specifications or return policies that don’t align with the operating procedures – or capacity to deliver – of other departments. This, in turn, erodes their ability to perform well and optimize their own compensation opportunities.
Such dynamics can do a lot of damage. They undermine the credibility of the compensation programs. And they fuel employee distrust.
From the vantage point of the employee, the organization is not walking its talk. It is saying that customer service is important but then allowing and rewarding actions that undermine such service.
What kinds of stories do your compensation programs tell? What messages is the organization sending through the behaviours and results it rewards and recognizes? Or through the behaviours and results that go unacknowledged?
Is the organization delivering clear and consistent messages? Or are there disconnects that have the potential to disrupt organizational performance?
By understanding that compensation programs are also communication vehicles, you can view such programs through a new lens. And that can help identify and resolve potential areas of discord, and put the focus on effectively encouraging employees to paddle in the same direction.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.