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.
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.
| Research has shown that productivity is profoundly influenced by compensation. We also have Daniel Pink’s mastery, autonomy, and purpose, of which we won’t lose sight, and yet compensation is still a critical element of collective employee effectiveness to drive the business forward. The bottom line is: compensation affects employee behavior, and employee behavior is a leading force in whether or not an organization is effective. | "The bottom line is: compensation affects employee behavior, and employee behavior is a leading force in whether or not an organization is effective." |
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?
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