Reason 8: Pay is Visible and Tangible

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.

"Including compensation in organizational change efforts is akin to an organization 'putting its money where its mouth is.'"

As with any of these ten reasons for the connection of compensation and OD, there are instances in which a pay or pay policy change simply doesn't make sense.  A team building exercise for a group of IT technicians who had historically been at each other's throats may very well not require a change in their compensation or a compensation initiative (although I would certainly be looking at their objectives to ensure they were aligned).  On the other hand, with the introduction of team incentives in tandem with behavioral interventions to root out the core issues, each member would see that the organization was taking the health of their team seriously - all the way to their bank accounts. 

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?