Communicating Compensation Programs

“Compensation Programs are the most relevant communication by any entity to its members.”

How the participants of any entity derive compensation for their contributions are the single most critical form of internal communication available for any organization. Regardless of what commands are given, or rules are created, participants understand and respond to a simple precept: what the company wants of me is what it pays me to do.

If an entity professes that it prizes most innovation, but rewards initiative far less than it punishes risk realized, then the motivation for making creative contributions will be negligible. If an entity professes that it values new sales, but offers minimal incentives while providing advancement based on reports filed and meetings attended, then bureaucracies will flourish and sales struggle. If an entity professes that it values commitment and completion, but pays based only on an hourly schedule, then the result will be specific and contrary to the intentions.

Always understand what the entity truly desires of its participants, and ensure that all practical compensation schedules are fully aligned with those ambitions.