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.

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?