Organization Development (OD) practitioners need the discipline of Compensation to reinforce the change they help effect through the power of extrinsic motivation and rewards. Compensation practitioners need the discipline of OD to help create the space for critical interactions and facilitate the dialog to increase the chances of acceptance, socialization, and success of small- and large-scale rewards initiatives. While I know the synergy occurs, by and large it seems neither Compensation nor OD ‘camps’ leverage each other effectively on a consistent basis. Even broader, most executives don’t recognize the need: they wouldn’t know to use the semantics of "filling the space between Compensation and OD” to make their business more effective.
Dr. Edward Lawler is Distinguished Professor of Business at the University of Southern California, Marshall School of Business, and Managing Director for the Center for Effective Organizations, and has been considered one of the top management gurus and workplace visionaries of our time. He is unique in that his background and experience cross the boundaries of both Compensation and OD, including authoring the only book I am aware of that speaks specifically to these two very different yet complementary disciplines. In his seminal work on the subject, Pay and Organization Development (Addison-Wesley, 1981), Dr. Lawler lists ten primary reasons to link Compensation and OD. The reasons for linking the two disciplines are as true today as they were over thirty years ago:
- Pay can influence organizational effectiveness
- Pay is an important cost
- Pay is a problem
- Pay is important to individuals
- Pay policy and pay practice are malleable
- Pay systems and institutionalization
- Pay and system-wide change
- Pay is visible and tangible
- Pay is a systemic factor
- Reward system influence on change efforts
I had the opportunity to sit with both Dr. Lawler and Dr. Gerald Ledford at the Center for Effective Organizations a few weeks ago to talk about more proactively filling this space between the two disciplines. On the heels of that discussion, I am motivated to spend the next number of weeks expanding upon each of the ten reasons, nestled in examples of filling the space (or missed opportunities) to more dramatically move the organization forward . I look forward to our discussion, and encourage you to comment on success stories where you have experienced the power of leveraging both disciplines for greater organizational success.