The Seven Habits of Highly Effective Compensation Professionals

There are many technical areas where we in the compensation (or rewards) profession must gain expertise, from the basics of aging market data and calculating salary ranges to the more esoteric requirements of sales compensation and long-term incentive design.  To truly make a positive impact on the organizations we serve, however, it is necessary to step beyond the technical aspects of our work (though we love them so, don't we?) and embrace the "softer" processes and tactics which will bring ultimate success.  This is true, I believe, whether your role is that of an internal or external expert.  The quant jocks among us must decide to either broaden their skill set and work style or accept that their career progression might be limited.

With this in mind (and with an apologetic nod to Steven Covey), I present to you my list of the Seven Habits of Highly Effective Compensation Professionals.

1. Work to deeply understand the business.  This includes the competitive market in which it operates, the needs and demands of its customers, and broader industry trends and developments.  You may develop, install and manage reward programs for a living, but your success in making a meaningful difference to the organization will be directly proportional to your depth of business knowledge and understanding.
2. Ask questions.  Every request for a new or modified reward program or practice should be met with questions - not just the polite, information gathering kind, but also the penetrating, squirm-in-your-seat kind.  In a professional, respectful and service-oriented manner, of course.   What do you want to be, after all - an order taker or a value adder?
3. Push back.  Their lips might say "incentive plan", but what they really need might be a better way to define and communicate performance expectations.  Or they might tell you that the performance management program needs to be overhauled when the real issue is a culture of denying and burying performance issues that no new form or rating scale will fix.  It's up to you to discover the true nature of the problem and ascertain whether/what reward solution will best address it. 
4. Seek to see reward policies and practices through the eyes of the leaders.  Your reward programs exist to support them in their efforts to move the organization forward, not vice versa.  Understanding and appreciating their perspective - and gaining their support - is critical to developing and implementing plans that make a real difference.
5. Seek also to see reward policies and practices through the eyes of the employees.  You can't improve reward plan effectiveness until you understand how it is perceived and acted upon by its customers, the nice people whose behavior you seek to impact.  You get this through direct conversations with them; individually or through a focus group process.
6. Embrace communication.  Reward programs succeed and fail as much by their communication as by their technical design.  We in this profession have a tendency to focus our time and attention on plan design and overlook the importance of clear, multi-channel, ongoing information sharing.  Learn a little about corporate communication, branding and marketing.  Discipline yourself to invest at least as much time (and ensure your management team does as well) in communicating reward programs as you do in their design.
7. Resist the reward flavor of the month.  Literature, best practice review and outside benchmarking:  Yes.  Monkey see, monkey do:  No.  Success comes from discovering the type and nature of reward program that will have the right impact in your organization, not by jumping on the latest trend bandwagon or cutting and pasting the incentive plan from your former employer.

Your thoughts on my list?  Is there another "habit" that you think is essential for success in our profession?

Creative Commons Photo: "Seven" by Kevin Collins

Comments

[Paul Hebert]

Great list Ann. I'm a big fan of Number 6 and 7 - two of the biggest problems in most any company initiative - whether compensation and incentive - or simply any new process/procedure.

Saw a great discussion I think on Frank Roche's blog (knowHR) - no one goes to the pharmacist and asks for the most widely prescribed drug and take that for what ails you. Just because a lot of people get it doesn't mean it will work for you! Same with comp plans and other "Best Practices."

Lack of communication is also huge, huge, huge. Take whatever amount of communication you think you need - multiply it by 10 and you're about right.

[Michael Haberman, SPHR]

Ann:
Shed a few words (reward and incentive for example) and this is a great list for HR people in general. If HR managers adopted these 7 habits the profession, the people and the companies would be much better off.

[Julien Dionne]

Hi Ann, I love the list, and especially the title.

Here is an attempt to create habit #8:

*Design comp plans with execution in mind.* Not every compensation professional agrees with the tenet to keep plans simple. This is not only required for effective communication, but also for the sake execution (after all, maybe some people believe believe it should look complex to validate their salary).

What I mean by execution is this... sometimes, theory cannot be implemented. Every once in a while I run into a compensation plan which needs to be implemented by a client. I'm sure the theory is good, but the only problem, the required data to support to plan does not exist. A bonus for store performance? No problem if we can actually tie employees to their store. Sure... we usually have this... but you get the point.

[Ann Bares]

Paul:

Thanks for the comment. Most of us who are out in the world trying to make reward plans work know the unfailing wisdom of 6 and 7, having watched our clients learn these lessons (repeatedly) the hard way!

Mike:

Good point - I agree!

Julien:

An excellent suggestion for #8. An unexecutable reward plan (and I agree, it is easy to fall into this trap) is not one destined for success! Thanks for adding to the list!

[Wally Bock]

Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2008/09/24/92408-a-midweek-look-at-the-business-blogs.aspx

Wally Bock

[Ann Bares]

Wally:

Thanks for the Midweek Review recognition. Readers, click through to see the rest of Wally's selections - great posts on leadership, crisis handling and getting the most from your brain!

[Jill Feibus]

Another twist on resisting the flavor of the month compensation programs - Don't put in programs that aren't sustainable!

When you have to eliminate programs or promised changes people get MAD. Most companies are on a financial roller coaster right now. Acting conservatively and scaling up is a better plan than having to scale down.