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.

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.

Collaboration and Measurement, the best enemies

We started this journey on collaboration in large enterprises discussing how organizational structures can stand in the way as far as collaboration is concerned. Today I would like to focus on a second aspect and this is measurement. To make it simple and to quote Dave Packard, a great west coast entrepreneur, “Tell me how you are measured and I will tell you how you behave”. And he is so right.

Indeed, people are willing to work together, naturally they have a helpful attitude. But in the end, the “what’s in it for me” question comes up. And frankly, if the measurement do not line up, bad luck. When times are good and the measures easy to achieve, there is not too much of an issue, but in the current environment, where the recession (officially ended though) is making achieving numbers difficult, it often is lonely out there.

I have seen companies giving sales people numbers by product lines, resulting in those numbers being achieved at the detriment of what is right for the customer. In particular, when the business units are strong, when they are the profit centers, developing an integrated approach to customers may be difficult. Top management should spend valuable time engineering a simple, but at the same time compelling measurement system to ensure they achieve the behaviors they want their company to portray. And it is that behavior that will foster collaboration.

Calculating bonuses on the success of the company (e.g. achieving objectives, profitability) may be seen as a way to foster this integrated approach, but it is important to think about how the individual contributor can influence the numbers he is measured on. If he is one of 300.000 employees to take a number, can he really influence the objective he is given? And so, will he act to improve this measure?

For sales people in particular, it is key to balance the measures that are part of the variable pay and the ones that provide bonuses. variable pay ones have the tendency to be the first ones to focus on, while the bonus ones are nice to have.

In a nutshell, developing a measurement framework fostering collaboration is feasible. However it requires a good dose of sound judgment and engineering at top management level, which ids often unfortunately forgotten.

5 key elements to promote collaboration

I couple weeks ago, I wrote an entry on this blog titled “Promote Collaboration in large Enterprises” where I pointed out I had been requested to present on the subject. I have progressed my thinking since and found 5 key areas playing an important role in building such collaboration. I’d like to spend the next entries to discuss each of those in a little more details, and do hope this can spur a conversation between us on the subject.

But before doing so, let me highlight which those 5 areas are so you have a structure of what I intend to blog about over the next weeks. Once the presentation has taken place, I also intend to give you some feedback on the discussion. So, what areas did I come up:

• Organization & Finance. Large companies are build around business units or product lines. Does the enterprise architecture, in other words, its organization foster collaboration? How are the budgets set-up and does this push them to competition or collaboration? Where are profits and revenues recognized?
• Measurement. This is the second leg. How are business units or product lines measured? Are those measurements inclusive of collaboration, or exclusive? Are they pushing entities to collaborate or to compete?
• Compensation & Recognition. Business Units or Product Lines work through people. How are those compensated and recognized for their success in collaborating with other BU’s?
• Culture & Leadership. Is collaboration core and center to the culture of the company, or is it a nice to have? How does top management behave? How often is the collaboration subject addressed by management, are they leading by example?
• Tools & Techniques. Tools support collaboration and make it easier for people to work together. Using specific techniques and approaches, collaboration can be made easier. However, it is a myth that tools & techniques on their own push companies to collaborate.

Actually what I discovered is that none of these 5 key elements can foster collaboration on their own. All 5 are required for collaboration to work across business units. Common vision and objectives need to be established and buy-in by the organization as a whole is required. Collaboration is not something that is established once and for all. A continuous reinforcement and effort is required for it to work within a large enterprise. When the economy works well, it’s easier than when times are hard. This might be a reason why the subject is popping up today. So, stay with me. We’ll look at this in more details.