Thursday, October 29, 2009

Compensation & Recognition

Many things can be said about how people behave, but recognition and compensation make many people do the right thing. So, the fundamental question is how we distill the right collaborative behaviors through the use of compensation and recognition. In the area of compensation, we obviously refer to variable financial compensation in one way form or shape. This is often called bonuses, and frankly these days that word does not have a very good press. Measuring people on collaboration, as referred to in the previous entry, and combine the achievement of appropriate goals with rewards help distill behaviors. However, there are a couple elements to keep in mind:

  • First the objective needs to be achievable and the person needs to have the feeling he/she can influence the objective
  • Second, the reward needs to be significant enough it gives the person the impression he/she is valued. Never forget that in many countries reward is taxed, resulting in the beneficiary absolutely not receiving what you pay.IMG_7887

Most people are in great need of recognition. According to Maslow’s Hierarchy of Needs, once people have addressed their physiological and safety needs, they are looking for a belonging and esteem. Recognition helps them feel part of a group and being respected. In today’s environment where most people in business have their physiological and safety needs covered, belonging to a group, being respected and growing their self-esteem covers their needs, and prepares them to unleash their creativity, their problem solving capabilities and all those other elements that maximizes their value for the business.

Recognizing somebody is often easy. But I am so astonished it is regularly overlooked by managers. Saying to somebody “Job well done”, pointing out the value he/she added, congratulating her/him in front of people should be a natural to management. It is a major aspect of leadership, one that helps getting the best out of people and increases their loyalty to the company and to management.

Compensation complements this as it is a more tangible way to recognize. It complements recognition, and should, in my mind, be kept for great achievements. It should not become a given. In my mind, the current bonus discussion demonstrates that compensation needs to be managed very carefully, or things are getting out of hand. The team and collaboration aspects should always be included. I remember my frustration when selling projects that the sales person received a lot of recognition and a big bonus, while myself, the project manager, and my team, who really had established the credibility in front of the customer, barely received a thank you.  That does not foster collaboration.

So, in a nutshell my rules are simple, recognize and say thank you, reward when truly remarkable, but always look at the core team as one, not a bunch of competing individuals.