We know that in our ever-increasingly dynamic environments, agility is key and temporary competitive advantages are the new reality.  Whether we recognize it or not, those temporary advantages include our people.  We want to attract, motivate, develop, and retain, yet what does that model look like when we know our best people are inevitably going to leave?

Attract (and Assimilate)
What if, along with attracting people to our organization, we begin to assimilate them into our culture with the first shake of hands?  The sense of belonging is one of the greatest needs we have as human beings and is just as important in the workplace.  So where the attraction fades away—dare I say just like in romantic  relationships—our people are brought rapidly into the culture so, no matter what, they feel as though they belong (or together we find out right away that it’s not a fit).   Our employees may not always stay in the same job, yet if they feel part of a larger family there is a greater chance they will move within the organization rather than out of it.

Motivate (To Do and To Share)
Many of our performance & rewards programs do a fair-to-excellent job of extrinsically motivating people to do a job well.  I don’t see this going away; it is an important part of the employer-employee value proposition.  Yet how often are we motivating our people to share their knowledge with others?  Is knowledge transfer on any of your organization’s performance objectives?  Given we may have only a limited duration with key employees, we are best served to get as much knowledge and wisdom from them as we can without delay.  The supplemental benefit is that others in the organization have the opportunity to stand on the shoulders of your organization’s giants.

Develop (Horizontally &  Vertically)
Horizontal development—what we would think of as our traditional development—focuses on imparting new skills, abilities, and behaviors through training, job assignments, and even mentoring and 360° feedback.  Vertical development has been defined as “…the ‘stages’ that people progress through in how they ‘make sense’ of their world.”  To be vertically developed is to have a high level of self-awareness and  consciousness and the mindset to think more clearly, work and live more proactively than reactively, and communicate and collaborate more authentically. However, vertical development is something one must attain on his or her own.  The good news is: organizations can not only create the conditions but also offer different types of approaches to incorporate the practice and exercise of vertical development capabilities.  We may end up creating the conditions in which some of our brightest are so vertically developed they realize they want to be somewhere else, yet we get the very best of them while they are with us.

Retain (and Prepare)
We would love to have our top performers stay forever.  Retention programs are as important as they ever were.  Yet at the same time we’re asking our people to stay, we can be preparing for them to go while including them in the process.   Most of us have heard the saying “I’m working my way out of a job.”  And in this case, I’m not only talking about doing exactly that but talking about being planful, proactive, and strategic in the way we go about it.  So while we finish up our High Potentials plan, we are asking those same HiPos to find their replacements, mentor them, and groom them for achieving the next one or two levels. For the 40%of organizations with inadequate bench strength, I suggest you get going!

When I co-founded the Entertainment Software Human Resources Association what feels like lifetimes ago, one year we had the great pleasure of having our annual conference hosted by LucasArts.  The meetings were held at Big Rock Ranch, adjacent to the famous Skywalker Ranch.  As we walked past lifesized Storm Troopers, and original Princess Leia and Darth Vader memorabilia, we noticed there were very few people.  Upon asking where they were, we were informed by our tour guide that the Ranch allowed for approximately 1,300 square feet per person and that it might feel a little more empty than a typical office building.  1,300 square feet per person?  That is more space than each of the three apartments my husband and I shared when we were first married!

Starbucks was packed yesterday morning at 9:30 a.m. - and I don't mean packed in the sense of a long line out the door for coffees-to-go.  I mean packed in the sense of nearly every seat was taken (and it's one of the larger Starbucks), whether individuals with their laptops and headphones, dyads easily comparing notes and sharing reports, or triads soaking in the sun while discussing the minimum amount for which they were willing to sell their company.  Coffees were on each table for sure, yet the buzz of conversation had little to do with caffeine and everything to do with community.

Another patron was equally astonished at the number of people, and as she and I waited near the cream and sweetener station for our drinks, we struck up a conversation.  Marla is a mother of two and works part-time out of her house.  When she really wants to concentrate, she comes to Starbucks.  She described it as being 'trapped' - her compulsion to jump up and do laundry, pick up after the kids, or clean the showers was held at bay by removing her from that environment.  She could be around other adults - that is, be in the midst of community, while still getting her own work done.

Starbucks seems to have captured that 'fireplace experience' at LucasArts, whether or not there's an actual fireplace.  People have their own space (more likely through headphones than 1,300 square feet), yet at any moment a conversation could break out between four strangers, or three dyads, or two groups - and the possibility of creativity is born.

I think about Yahoo  and wonder if bringing their employees back into the office actually thwarted any of this organic creativity stemming from these types of 'fireplace experiences' within employees' own communities.  Understandably, Marissa Mayer is hoping to create the environment in which these experiences happen in-house to harness and leverage the innovation that emerges within this type of collaboration.  Yet I wonder how much credence and credit we give our employees working even part-time from home  that they're making their way toward connection, community, and creativity already.  They want it as much as organizations need it.

Yet not every organization can afford 100 square feet per person let alone 1,300.  And likely not all buildings are constructed nor legally coded for fireplaces.   As organizations great and small, for-profit and NGOs, what is it we can do to create the environment in which we enable this organic, "Let's stop here, have a coffee, and brainstorm about our next big challenge" moment?  Perhaps it's easier to look at what's getting in the way - furniture, walls, doors, stairs, coats and ties, or invisible boundaries like silos or lines of authority - and slowly begin to eliminate, or at least soften them one-by-one.

We were made to be with each other; relatedness is in our make-up.  And as odd as I first thought it was to see such a packed coffee house at 9:30 on a Wednesday morning - when people would typically be boxed up in their cubicles, heads down and flourescent lights aglow - looking back on my enlightening LucasArts experience, it made perfect sense.  More elbow room, only four large walls, natural light, outdoor seating, and sometimes even an indoor fireplace.  If Luke Skywalker would have been one of the employees to move from Big Rock to the Presidio, I'm guessing more often than not, we would have found him at the local Starbucks.

Some of you have asked me about my choice of images for my  website. "What's with the stained glass?" you’ve asked. I thought we were talking about  aligning strategy, performance & rewards. Great question and the simplest  answer is: complexity. The paradox of order and disorder - one of the hallmarks of complexity theory, as I discuss in a previous post - comes into play when I speak of alignment in what Joshua Cooper Ramo refers to as the new 'revolutionary era.’  In a nutshell, old ways of thinking simply don’t cut it anymore.  Alignment means something very different today than it did not that long ago.

When I talk about alignment today, I think fluidity and  movement. I think non-linear. I think creativity. I think agile. And, paradoxically, I think deep infrastructure. I think strong lines. I think core.  The stained glass images represent this paradox for me. The images are a creative representation of my thinking on how alignment lives and moves in the 21st century, and while alignment remains pivotal to organization success, we must be willing to break away from some of the linear thinking of the past.  Towers Watson said it well when they stated in a 2012 report, "Companies are running 21st century businesses with 20th century practices and programs."

Performance & Rewards is an area in which old thinking abounds. Fixed salary grades, stagnant job descriptions, and annual performance reviews built on static objectives are just a few examples of antiquated programs developed in a time where hierarchy was revered and organization was analogized to a machine. I understand why they still exist; in past lives I've helped create and maintain plans that include these very elements! There are legalities and financial constraints that we simply can't ignore. However, the go-to solution is new wine in old wineskin. Folks, the wineskin is seriously leaking.

The key is the willingness to lean into this new idea of alignment in our ‘VUCA’ world (i.e., volatile, uncertain, complex, and ambiguous) as opposed to attempting to control it.  It’s not for the faint of heart!  Hence the necessity to build up your organization’s core – core mission, core competencies, core processes (communication being at the top of the list), core structure, core value proposition – while remaining agile and responsive to the broader environment.

There are ways we can begin to incorporate new thinking - a new way of aligning people, performance & rewards to the business strategy - into the way we do business and empower our talent. I have mentioned changing the dialog in previous posts, and this is a great opportunity to practice. One place to start is 'both/and' thinking. For example, we need to evaluate performance and maintain a feedback loop AND we have changing objectives throughout the year.   We have a finite pool of rewards dollars AND our headcount continues to increase. 

Rather than battling over which to address - which is often a welcome yet dysfunctional distraction from the issues at hand - we own that both are the reality and we start the conversation there.  Get people in a room together who don’t normally get in a room together.  Highlight the tensions and discuss them with openness and curiosity.    In this way, you begin to strengthen your organization's core and build capacity for new ways of thinking and communicating.  In essence, you create your own story of the stained glass.

We have arrived at the tenth and final reason in Dr. Ed Lawler's list of ten reasons for combining and  leveraging the complementary competencies of Compensation and Organization  Development (OD) (see Lawler 1981).  Reason #10: Reward System Influence on Change  Efforts speaks more broadly of the total rewards initiatives (compensation, benefits, recognition, etc.) and how they can influence the effectiveness of organizational change efforts, both big and small.

Rather than a "Case in Point/Cut to the Chase," at this point I would like to take a step back and take into consideration these ten reasons for combining and leveraging the disciplines of Compensation and OD:
1. Pay Can Influence Organizational Effectiveness
2. Pay is an Important Cost
3. Pay is a Problem
4. Pay is Important to Individuals
5. Pay Policy and Pay Practice are Malleable
6. Pay Systems and Institutionalization
7. Pay and System-Wide Change
8. Pay is Visible and Tangible
9. Pay is a Systemic Factor
10. Reward System Influence on Change Efforts

As one might classify qualitative data by codes and themes in a research project, I see a few key themes surfacing as I review the series:

- First and foremost, pay - compensation - touches everyone in the organization.  There is little within an organization that has as far a reach or as emotional an impact as employee compensation. 

- Second, compensation is important.  It's expensive, it's meaningful, and while it may or may not be the primary motivator for certain employees, it still provides the means for living at a desired standard. 

- Finally, compensation is systemic and embedded within the relationships and connections inside an organization.  So whether the desire is to change the culture or change the organization chart, the simple act of making a change requires a review of compensation and rewards for possible implications.  At a minimum, rewards strategy should always be included in the change effort framework.

I have enjoyed entering into this conversation with you, knowing it is simply the tip of the iceberg.  Although future conversations will take different twists and turns, my point of view is deeply grounded in the importance of bringing these disciplines together to improve the dialog around increasing organization effectiveness and building the capacity to successfully address our greatest organizational challenges.  I look forward to continuing the discussion.

We are winding down our first blog series, grounded in Dr. Edward Lawler’s book, Pay and Organization Development. We have reached Reason #9: Pay is a Systemic Factor. If I were to pick a 'favorite’ of Dr. Lawler’s top 10 list, this would be it.

I am very excited about the direction Organization Development and Change is heading; that is, toward more of a complexity paradigm and post-modern networked reality, and away from a purely open system model. To me complexity and networks make more sense than simply a factor of inputs, transformations, outputs, and feedback (yes, I’m oversimplifying).

Consider there is much more to both of these, yet for now the point is: what does complexity and network theory have to do with Compensation and Organization Development (OD)?  A lot, if you ask me.  If someone half way around the world can link themselves to Kevin Bacon in six degrees or less, how much more connected are people in one singular organization or industry?  And if you change the job title, the job duties, the function one oversees, or an organization chart, you've likely affected many employees you wouldn't have even considered, including their compensation, career trajectory, and classification.

Case in Point: Employee Services happened to mention in a meeting I was in that they were working with OD and the Logistics Administration (LA) department to dramatically change the organization structure.  They wanted to increase responsibility for a certain subset of Logistics Administrators, moving them to a more customer service-oriented role.  LA wanted to create a better career path for its employees - fair enough - and had thought they found a way to do it by just shifting a few things around.  My colleague believed he had another satisfied customer; his smile suggested, "Where's the ribbon so I can tie it up in a bow?"

Cut to the Chase: Fortunately for all of us my colleague did mention the changes underway, because what they thought was a simple modification to some job descriptions and boxes on an org chart became a potential Fair Labor Standards Act (FLSA) nightmare.    What surfaced was not only that the new positions would be Non-Exempt, but the old positions should have been all along.  The job duties had previously been described as Exempt (read: inflated), and the truth was suddenly coming out since it now served them to position the new Customer Service Administrator job as 'higher level.'  I told my colleague he needed to 'untie the bow' and work through step-by-step with OD, LA, and Compensation what needed to occur to first and foremost ensure legal compliance, and simultaneously meet the business needs.  We then had to discuss the implication of the Product Administrators, a separate group seemingly unrelated yet for years had mirrored the LA group structure, pay levels, and FLSA classifications.  Pandora's box was quickly opening.

Pay is systemic.  We change one thing in an organization, even if it seems completely benign or is noneconomical, and it can change many others - from individual pay levels to titles to office space to culture.  As Lawler (1981, p. 8) states, "pay systems in organizations are closely linked to the following major aspects of organizations: superior-subordinate relationships, job design, organizational structure, organizational climate, management training and development, information and control systems, performance appraisal, and management philosophy or style."  I am guessing readers can add to this list.  In a nutshell, both Compensation and OD are well served and highly encouraged to come together to discuss change efforts at their onset so that the more complete story is told, and the fundamental issues are addressed using a planful, robust methodology that takes this complexity and network of connections into consideration.

What examples do you have that illustrate the systemic nature of pay?

We have arrived at Reason 8 of 10 for leveraging the complementary competencies of Organization Development (OD) and Compensation.  These ten reasons for why OD and Compensation practitioners should not only be aware of each other but concerned and connected with one another come from Dr. Ed Lawler's seminal work on the subject, Pay and Organization Development (Addison-Wesley, 1981).  Reason 8: Pay is Visible and Tangible.

Dr. Lawler's argument for this particular reason is rooted in pay being quantifiable, having "a certain reality" to it.  While many of the variables OD works with are considered behavioral or "soft," compensation can be seen, touched, and felt by every single employee of an organization.  He goes on to say many cynics of OD complain that nothing real has been tackled; that nothing has really changed nor is a real difference being made.  Conversely, when pay or compensation initiatives change in association with an organizational change - regardless of how big or small - the tangibility of the direct impact on rewards received by employees deflates any argument that things have stayed the same.  Whether pay goes up or down, people know something has changed which can then help signal the broader organizational change.

Case in Point: I return to the large computer entertainment organization who had successfully institutionalized behaviors through the malleability of its rewards programs, targeting each years' primary goals as part of its management incentive plan.  Until we incorporated inventories into the rewards program, leadership gave it little thought.  "It will have to wait; I have bigger [and sexier] fish to fry."  However, when the company was willing to pay out significant sums of money for the return of  strengthened key financials that otherwise got overlooked, suddenly we had their attention.

Cut to the Chase: I can say from experience with this organization that other endeavors at organization-wide or even division-wide change were never so successful as when we associated them with compensation.  I do raise the issue of culture: this particular organization - industry - had a higher focus on rewards than some, and so I do encourage an assessment of cultural appropriateness.  Yet when the company needed to make a large-scale change in behaviors and focus, they were able to make sweeping changes more effectively and be taken more seriously when dollars were attached.

Including compensation in organizational change efforts can be akin to an organization "putting its money where its mouth is."  There is a level of gravity and significance that can trigger greater confidence in the organization and what it is attempting to change when rewards are combined appropriately with organization change.

Where has your organization successfully utilized the visibilty and tangibility of money to increase the success of a large-scale change?

We’re rounding the bend on the last of the top ten reasons to leverage the complementary competencies of Compensation and Organization Development (OD) for greater organizational effectiveness. These ten reasons, extracted from Dr. Ed Lawler’s Pay & Organization Development (Addison-Wesley, 1981), are hopefully a jumping off point for some rich dialog, both internal to organizations and external, around how these very distinct disciplines can partner to help drive the business forward.  We come to Reason #7: Pay and System-Wide Change.

That compensation initiatives are probably an organization’s strongest lever of enterprise-wide change will not come as a surprise if you’ve read my previous Musings.  I have mentioned this numerous times, in numerous ways.  Yet what may surprise you is my twist on this particular post.  OD has large-group methods that also have the ability to reach a broad audience. I agree with Dr. Lawler that, “many of the traditional interventions that organization development specialists use impact on only small groups of employees.”  Yet there are also many methods and forums used by OD practitioners to bring about successful large-scale change.

Case in Point: On one of my less-than-shining moments some moons ago, I reluctantly agreed to revamp the domestic U.S. salary structure with the request to “keep it off the managers’ desks.”  Everyone was inordinately busy and the directive from the CEO was to keep everything ‘administrative’ away from management; the project to upgrade the salary infrastructure was deemed 'administrative'.   Whether they realized it or not, I had the attention of 70% of the population: decisions we made could result in a red circle, an increase in pay, a change in exemption status, or greater or lesser opportunity to financially progress just to name a few.

Cut to the Chase: Had I known about one of these large-group methods of change at the time, I could have partnered with OD to build a rich, 'non-administrative' dialog with a large group of leaders around the U.S. about what the organization needed relative to the pay structure ("what did we hire it to do?"), what the obstacles were to being able to attract and retain talent with regard to salary, and other strategic and philosophical topics.  It might have taken two days of managers’ time on the front end (this obviously excludes what can be months of set-up behind the scenes), yet I am convinced collectively and methodically gaining their insights – and they from each other - would have saved weeks' if not months' worth of questions, confusion, and disruption on the back end. 
 
While compensation is undoubtedly one of the largest levers of organization-wide change, it is important to not lose sight of the great tools OD has to help implement these large-scale changes.  There are times when I’m guessing Compensation professionals have lost sight of the power at their fingertips.  I know on occasion I did, and I only wish I had then known about methods like Open Space and Future Search to gain the important broad-reach collective buy-in for greater success.

I wonder how familiar most Compensation professionals are with this type of 'large-group intervention'.  (I know I wasn't until I entered the Pepperdine MSOD program.)  I'm also curious as to the possibilities people can see in using some of these methods to more successfully implement broadbased compensation changes.  Thoughts?

Today we start the second half of the top ten reasons to leverage the complementary competencies of Compensation and Organization Development (OD) for greater organization effectiveness and employee empowerment.  The top ten reasons come from Dr. Ed Lawler's book, Pay & Organization Development (Addison-Wesley, 1981) - the only book I know of that speaks to the natural synergy between the two disciplines that can better move an organization forward.  Reason #6: Pay Systems & Institutionalization.

Institutionalization is a big word and can speak to many things.  In the context of this discussion, we are talking about institutionalizing - incorporating into the fabric of the organization - desired behaviors that support an organization's mission, vision, and strategy.  Compensation is a powerful lever to institutionalize behavioral change.  In fact, attempting large-scale change without assessing and potentially modifying compensation strategies can result in little to no sustainable impact and loss of precious time, dollars, and resources.

Case in point: The CEO and COO of a global, multi-billion dollar organization decided their company wasn’t working the way they wanted it to.  The Sales force was too busy selling their personal cash cows which were last year’s news; the CEO wanted to innovate and fill the pipeline with new product orders.  The throughflow from Marketing to Engineering was murky at best, completely stalled if not confrontational at worst. Creative departments rolled up to Operations while pure cost centers were borne by departments responsible for generating revenue.  The top executives wanted streamlined; they wanted agile.  So the two of them reorganized the entire company– in less than a month.

Cut to the chase:   By and large, the reorganization took place in a MSWord document with SmartArt.  Four boxes spelling out the four core competencies of the organization were big and colorful across the page.  It looked great!  Simple, clean, easy to understand.  Yet when it was rolled out only a month after its inception, it wasn’t surprising to hear that nothing had really changed other than some departments changing cost center codes and some new supervisors put in place. Processes didn’t change and, more importantly, neither did behaviors because what had been institutionalized through culture, rewards, and time was not about to change overnight.  While there were unfortunately a number of things missing from this scenario, from the need for greater study of the core challenges to much broader participation by the executive team and beyond, one of the core reasons behaviors didn’t change is because the performance objectives (that were also tied to rewards) were not modified to align with the new organization structure: rewards were still pointing to the past.

While this was an example of (a very expensive) missed opportunity, I'd like to ask you to share an example of where behaviors were successfully institutionalized through performance & rewards.  What made the difference?  To what specifically do you attribute the greatest success?

We continue our series on the top ten reasons to join the efforts of Compensation and Organization Development (OD) for greater organization effectiveness.  I am not necessarily referencing a change in organization chart to have both disciplines report to the same manager (although I understand there have been a handful of cases where that has happened).  Rather, Compensation and OD have complementary competencies that, when leveraged together, enable greater, more successfully adopted large-scale change to help move an organization forward.  I am unpacking the top ten reasons Dr. Ed Lawler provided in his seminal work on the subject, Pay & Organization Development (Addison-Wesley, 1981).  Reason #5: Pay Policy & Pay Practice are Malleable.

According to Merriam-Webster, one of the definitions of malleable - best for this particular context of Compensation & OD synergy - is "having a capacity for adaptive change." Compensation strategies, design elements, pay practices, programs, and processes have nearly endless combinations to adapt to the business context - albeit constrained to some degree by legal and financial concerns.  That may be hard to hear given the constraints and given the, "that's how we've always done it" corner into which we sometimes paint ourselves.  Yet the truth is that, by and large, design elements within compensation initiatives can take many different forms.

Case in point:  A large computer entertainment organization had found a great stride in its business strategy, customer loyalty, and value proposition to shareholders and employees alike.  It was a very successful organization.  One of the reasons for its success was taking full advantage of rewards initiatives to help steer the rudder in the direction the company wanted to go.  Each year, key stakeholders would meet with HR, OD, and Compensation in a facilitated dialog to discuss The Next Big Thing (TNBT).  While there were both long- and mid-term plans charting the course, TNBT would help guide the next twelve months resulting in the development of healthy performance goals and custom rewards programs.

Cut to the chase: Each year, it was crystal clear where the emphasis had been placed.  The organization was able to run analytics to show the gains in margin, cost management, new product offerings, inventory reduction - wherever leadership had pointed TNBT.  They used the malleability of rewards programs in concert with getting the right people in the room to facilitate healthy dialog, to expertly steer the ship and its crew to their desired destination.  And because OD now knew the future direction toward which behaviors would be pointed, they could craft their efforts to complement, rather than conflict with, the business strategy.

How are you taking advantage of the malleability of rewards and the partnership with OD to help guide your organization in its desired direction?