Aligning compensation and outcomes

What I've wondered for quite some time is why it is so difficult to align what we want people to do with how we evaluate (and, by extension) how we compensate them.  Increasingly, as companies hold the line on hiring, we are asking fewer and fewer people to accomplish more tasks, yet how we evaluate those individuals doesn't seem to change, and of course compensation models and metrics are either frozen in time or are so arcane that no one understands them.

Certainly with the computing power and focus on the individual that exists in society today we can structure programs that are tailored to individuals and what we need (want) them to do.  If half of my childrens' classmates have an individual education plan (IEP) which dictates a special course or study or testing or enhancement, then certainly we can structure individual evaluation and compensation models based on the work we urgently need to get done in most organizations.

Right now, of course, excessive compensation and compensation tied to options and stock are getting a close review due to stories in the media about executives pulling down millions in compensation.  In many of those cases one could easily argue that the boards and shareholders are doing a terrible job of evaluating the actual benefit created by the CEOs and executives.  Too often they seem to get bonuses or options regardless of the performance in the market.  While this is happening, many thousands of people within those same organizations are seeking clarity about what's important and what they are evaluated and compensated to do.  How this is possible given the systems and communication devices available is beyond me, but I routinely talk to mid level managers whose evaluation criteria are very unclear and don't match what they are asked to do, leaving them in a quandry.

If firms are really interested in getting the most out of their employees, then they'll address this yawning gap between how people are measured and evaluated, and what the management team actually wants them to do.  More closely aligning the evaluation and compensation with strategic corporate goals, at a group or individual level, will do more than any Six Sigma, Lean or other initiative.

Comments

[Leonhard Siemens]

WTF! I hoped you have something to say about this. Apparently your idea of Aligning compensation and outcomes is that compensation needs to be aligned with whatever outcomes the employees are asked to perform. OMG! Thanks for the input!

[Nursing tops]

wow! thanks for sharing this informative post! a well-developed business plan that maps out where the organization wants to go and how it will work toward that goal for the next twelve to twenty-four months is essential.

[fertileaid views]

Too often they seem to get bonuses or options regardless of the performance in the market.