The New Year is rapidly approaching. If you are in the IC world, the pressure is on you to formulate and calculate budgets for next year’s incentive and rewards programs.
Like most, you need to balance: rewarding top performers, targeting the right motivators, harmonizing cash and non-cash incentives, and staying aligned with your corporate philosophy. All the while, fitting these factors into your overarching financial budgets.
BUT, have you considered if your program is leveraging the human dynamics that are at work in your culture? Are your programs targeting the right behaviors and tapping into the right human motivational drives? These human factors are the keystone to acceptance, performance, and ultimately success. Remove that keystone, or design it improperly, and the pillars come crashing down.
Image: Designing with human factors v.s Designing without human factors.
Let’s look at a quick case study to see how human dynamics impact your programs. We recently partnered with BehaviorAlchemy to complete a total rewards audit for a large international pharmaceutical sales organization. It is important to note that when we complete a rewards audit, we don’t just look at the program itself, we look at the human elements that it impacts. It’s not just about the numbers, although we do analyze those, it’s also about the behaviors. We often turn to the 4-Drive Model of Employee Motivation as the when working in ths realm. This model was orignally conceived by Paul Lawrence and Nitin Nohria in thier book Driven – a must read for anyone working in the business world.
For this particular project, we were tasked with determining why the company’s current total rewards structure was not hitting the mark when it came to field buy-in and performance.
Our behavioral reward audit process involved qualitative interviews with senior leadership to explore the key strategic aspects that are needed moving forward. We then conducted a series of focus groups with field managers and sales representatives from across the organization. These focus groups were used to access the perceptions of the field and understand how the current reward framework drove attitudes and behaviors. In addition to the focus groups, we conducted several one-on-one phone interviews with the field and other key stakeholders in order to deeper explore some of the insights we uncovered from the focus groups. Finally, we analyzed this data using a behavioral lens to see how we could improve or change the various reward components to drive greater engagement, motivation and ultimately performance.
What we anticipated what was that there would be an issue with the incentive design itself.
What we learned was that there were much larger issues at play. Concerns around organizational trust, organizational mission and vision, leadership, goal allocation biases, and communication that took an otherwise well-designed program and squeezed the life out of it. The interpretation of the plan was negatively impacted by an overall lack of trust in leadership and corporate culture.
Because we sifted past the purely tangible elements of the program and folded back the behavioral layers, we were able to learn that the issues the company was experiencing went well beyond the program design and the rejection was amplified based on complex human elements derived from issued within the corporate structure.
Now you’re probably wondering, how do you fix this? Understanding the problem is only a small part of the battle. The short answer is shameless self-promotion – let us audit and fix it for you! The long answer – communication, communication, communication, and did I mention… communication? In more complexity, it is a combination of things that can include design, training, structure, culture, understanding where your toxic roots are and removing them, and more – but communication is the most often overlooked and the biggest “bang for your buck” place to start.
Communication is the bridge between leadership/the company (in this case you) and your team. It’s simple – if that bridge is poorly constructed, your employees are not going to want to cross it. They will stay on the other side amongst themselves and there will be a lack of trust and acceptance in the programs that the bridge connects them to.
Often companies overlook this simple concept – allocate more budget toward building that bridge the right way, and you will often see a big return in your program’s effectiveness. So, what is the forgotten key line item that should always be considered when building your total rewards budgets? You guessed it – communication!
A story is only as good as its delivery. Your total rewards programs are the same.