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Ann, I've been wondering if we'd see the resurgence of MBOs. I lived through about every comp approach known, and MBOs, when done well, seemed to work in down economies. Interesting ideas here...we're seeing a lot more focus on PFP and STI comm from our clients. It's a tough year...and a tough one ahead. It'll be interesting to see it play out. (May we live in interesting times.)

Frank:

An MBO resurgence in a down economy would make sense to me. I find it particularly heartening to hear that your clients are seeking comm assistance for PFP and STI - I have always believed (and preached, to anyone who would listen ...) that strong communication is at least as important as (and in some cases more important than) plan design.

It will indeed be an interesting year. Thanks for sharing your thoughts and observations!

i agree with you ann. and i think in 2009, for HR, the toughest issue would be how to evaluate and redesign performance management system to drive up company's performance and measure employee's contribution in this tough period. and this may include PM for HR themselves as well.

Thoughtful post, Ann. I like the structure you outline, but I think two other things are important, for the structure to work. First, top leadership has to lead by example and be transparent about compensation. Second, the hard work of day-to-day supervision has to be done well.

Ah, yes... the good old cascade approach. Always effective when properly done, via KISS. Settles the worried, keeps the eye on the prize, what's measured gets done, high-visibility, prompt feedback, corrective adjustments, etc.

Insightful post, Ann. I agree the need is great to get all employees focused on achieving the company the goals and I like your script. It is critical to clearly and concisely communicate those goals to employees as you indicate, including targets and metrics for success.

However, I disagree a cash payout once targets are achieved as a whole is the best reward approach. As you say in your script, every employee's effort impacts achievement of those individual goals. Similarly, every employee needs recognition for their efforts and validation that their work is appreciated — now more than ever.

If those individual recognitions are tied to a company value demonstrated or strategic goal achieved (or contributed to), then employees begin to see how their individual efforts contribute to company success. This is by far the most positive and effective way of encouraging repetition of precisely those actions company leaders need from every employee to succeed in this recession.

Strategic recognition programs specifically can also chart those recognitions and reasons given to show which groups or individuals are contributing where and which areas may need more targeted intervention for the company to achieve the goals.

I blog extensively about recognition in a recession here:
http://globoforce.blogspot.com/search/label/recognition%20in%20an%20ailing%20economy

Wow - what a great set of comments. Thanks, all, for weighing in on this!

Martin: I agree, performance management is a key element of getting all oars pulling in the same direction.

Wally: Absolutely true - particularly the pay transparency thing. The only way the scenario I outlined would work is with a completely transparent plan - none of this discretionary "let's-figure-out-at-year-end-what-we-feel-like-paying-for-these-results" business. And effective day-to-day supervision is the glue that holds the whole thing together.

Jim: Yes the cascade approach. So simple in theory, yet so inexplicably hard to actually pull off, no?

Derek: Cash and recognition are always good complements - the key is melding them together in a way that maximizes what each can accomplish. Thanks for the link to your blog and the post on recognition in a recession.


Ann:
Many are fans of incentive pay, and as you noted now is the time to pull together. One problem with a strick goal approach however is behavior. The same reason MBO needed to develop BARS. Focusing on the goal and not controlling the behavior used to achieve the goal gets us in trouble time after time, as we have seen with numerous companies. Any suggestions on how companies deal with that aspect of incentive pay? People will cheat.

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About The Author

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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