I came across this article while researching companies with a strong culture and brand. It reminded me of earlier work I had done with compensation and its impact on culture.
Harvard Business Review May 2013 Michael Watkins discusses responses when he asked the question,” What Is Organizational Culture? And Why Should We Care?”
“In large part, culture is a product of compensation.” — Alec Haverstick.
It made me consider companies I know and what the impact and consequences of not only their compensation programs, but also what they measure.
I worked with a client many years ago who was doing all the right things. Culture was an everyday word at this organization. There was open communication all the way to the CEO level. A committee worked on getting employees together outside of work to better know and understand one another. Part of the performance review at years end looked at and rewarded examples of competencies and behaviors that demonstrated respect for individuals and teamwork. Yet they were not meeting their revenue and profit goals. They had missed their bonus target for several years. The employees felt like the bonus was something that they could not achieve and it was impacting their value of teamwork. The executive team asked me to look at their compensation plan and see if there was something they were missing.
I reviewed their current plan. I spoke to the heads of each department to get a sense of duties, responsibilities, work flow, etc. After several days, I discovered that the employees wanted to do the right things to increase top line revenue and profit, but some were unsure of how their contributions impacted either of those, and some of the teams actually had targets that worked against the other departments.
By aligning the financial goals with the key accountabilities of individual contributors, AND with those in other departments they were able to meet their target and pay out those bonuses!
As you develop the framework for the values that shape you culture, ask yourself, do they complement or compete with your current compensation strategy? What should change, the compensation or the values that define the culture?