Reward System Restructuring

Measurement and Reward Systems are a cornerstone of the learning organization. It is a fundamental fact of human behavior that people will tend to do the things for which they are rewarded. Thus it makes sense to measure and reward the behaviors the organization needs to see from its employees.

Most organizations do this very badly. To determine how badly, one must only identify behaviors supported by current reward systems, and compare them to the behaviors needed to achieve strategic objectives. This comparison should be made at all levels in the organization. Here are the behaviors rewarded by some classic organizational policies:

• Fixed-rate annual raises reward attendance and not making waves.
• Big executive bonuses based on personal performance factors reward suboptimization and internal competition.
• Annual appraisals based on "canned" criteria reward rote repetition of historical activities.

Clearly this is no way to build a competitive, learning organization. Replacing these time-worn approaches with the right mix of more innovative tools can make a huge difference in work force behavior. The newer tools include things like; individual objectives and rewards, team incentives, spot rewards, and non-financial incentives. Of course all these rewards must be focused on goals that are subsets of the organization's strategic plan.

Another benefit accrues to the organization from a well-crafted measurement and reward effort. It forces top management to do their homework. They must provide a set of organizational goals that can be readily translated into clear, general instructions for workers.

This kind of review has proved very beneficial both in industry and in government. It is usually included, at least informally, in all business process reengineering and strategic planning efforts.

See also: Strategic Planning Business Process Reengineering Organization Redesign

The Stanton Group www.stangroup.com