We continue our series on the ten primary reasons for integrating the knowledge and resources of Compensation and Organization Development (OD) for greater organizational effectiveness, originally provided by Dr. Ed Lawler in his book, Pay and Organization Development (Addison-Wesley, 1981). We find ourselves at reason #3: Pay is a Problem.
This is another one of those "Duh" moments where we could all check the box and go on about our day. But before you pick up your coffee mug and head down the hall, consider the following. If you've been reading this series thus far, you've already seen the power of asking the right questions to get to the best solution for the particular issue and context. With that said, as we scan our environments we can find a lot that is 'wrong' with our organizations and start to believe money has little to do with the bigger picture. Rather, we more often have a "both/and" situation where there is something larger at play, and the compensation is off. Whether that means pay levels are less than competitive, or whether the mix of fixed and variable pay is not helping influence behaviors in the desired direction, pay can and does create very real issues. So as we learn to more deeply explore the heart of the matter, consider we may be operating in a both/and paradigm.
This is another one of those "Duh" moments where we could all check the box and go on about our day. But before you pick up your coffee mug and head down the hall, consider the following. If you've been reading this series thus far, you've already seen the power of asking the right questions to get to the best solution for the particular issue and context. With that said, as we scan our environments we can find a lot that is 'wrong' with our organizations and start to believe money has little to do with the bigger picture. Rather, we more often have a "both/and" situation where there is something larger at play, and the compensation is off. Whether that means pay levels are less than competitive, or whether the mix of fixed and variable pay is not helping influence behaviors in the desired direction, pay can and does create very real issues. So as we learn to more deeply explore the heart of the matter, consider we may be operating in a both/and paradigm.
| Operating in this paradigm means filling the space between Compensation and OD to its fullest. The technical knowledge of Compensation, including everything from legalities to market competitiveness to forecasting costs, combines with the behavioral knowledge of OD to build the capacity to adapt and excel, resulting in better, longer-term solutions to move the business forward and empower employees to do their best work. | "...we often have a "both/and" situation where there is something larger at play, AND the compensation is also off. So as we learn to more deeply explore the heart of the matter, consider we may be operating in a both/and paradigm." |
Case in point: An MRO (maintenance, repair & overhaul) organization had Service Representatives located in nearly one hundred countries around the world. Turnover in this talent pool had doubled within the last 24 months and the organization's leader was convinced it was a pay issue. She asked to do a market study to justify increasing pay for all of the Service Reps to the market 50th percentile. As the process of discovery began, it came out that in fact many of the employees were leaving because they did not see a career path. They saw their service roles as dead-ends and felt they could grow more at competitor organizations.
Cut to the chase: Had we stopped there, we would have addressed the career path and would probably have met with some success. However, because of the level of turnover and the additional data we obtained through interviews and town halls, we decided it best to simultaneously pursue a market study. In fact, the current compensation in several countries was much lower than the competitive market. In a massive joint effort between the business, Compensation, OD, and HR, we developed a new career path program and targeted increases to be provided incrementally over a defined period of time, resulting in dramatically reduced turnover which in turn increased employee engagement and loyalty.
How well does your organization operate in the 'both/and' paradigm of Compensation and OD or beyond?
Cut to the chase: Had we stopped there, we would have addressed the career path and would probably have met with some success. However, because of the level of turnover and the additional data we obtained through interviews and town halls, we decided it best to simultaneously pursue a market study. In fact, the current compensation in several countries was much lower than the competitive market. In a massive joint effort between the business, Compensation, OD, and HR, we developed a new career path program and targeted increases to be provided incrementally over a defined period of time, resulting in dramatically reduced turnover which in turn increased employee engagement and loyalty.
How well does your organization operate in the 'both/and' paradigm of Compensation and OD or beyond?
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