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’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?

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?

As indicated in my inaugural post, I am taking the next number of weeks to expand upon the ten primary reasons why Compensation and Organization Development (OD) should be linked for most, if not all, organizational change efforts. These ten reasons come from Dr. Edward Lawler’s seminal work on the subject, Pay and Organization Development (Addison-Wesley, 1981).  Reason #1 to join Compensation and OD efforts is because Pay Can Influence Organizational Effectiveness.

I could stop there, on the count of three we all could say “Duh”, and I could spend the next hour doing something else.  Yet if it were that obvious, I would think there would be more hard evidence as to organizational effectiveness through the use of leveraging Compensation in OD efforts and vice versa.  I know it is happening, including a handful of organizations that have actually blended Compensation and OD into one department, yet the opportunity to increase the level of consistency at which these competencies are integrated is significant.

 
Case in point: A large high-tech firm was suffering from scattered customer support and an array of customer service styles that left clients scratching their heads.  After stakeholder interviews and focus groups, it was decided that a Customer Service training program made sense to ensure consistency in customer care.  OD set out with the management team to bring the program to life, including defining what customer service meant to this particular organization.  A solid approach, no doubt.  However, a few short weeks after the training had concluded, new customer complaints began to roll in.  And fights were breaking out between Program Managers and Client Managers, and Client Managers and Customer Service Reps.  

Cut to the chase: Nothing else had changed besides adding a Customer Service training program.  Objectives that were tied to bonuses remained the same, job descriptions had not been altered to reflect the heavier emphasis on customer care, and old habits proved once again to die hard for most of the employees involved.  Had Compensation been a part of the dialog, the solution could have incorporated the full suite of motivations to align behaviors with the direction the organization wanted to go.

Business productivity, effectiveness, and the ability to become increasingly agile become more viable when the power of extrinsic and intrinsic motivation is harnessed through a joint effort of critical competencies, starting with filling the space between Compensation and OD. 

How do you see Compensation and Organization Development efforts linking to achieve greater organizational effectiveness?