Seeking Balance in Your "Portfolio" of Rewards

When considering an organization's overall reward program, I find it helpful to look at total rewards as a portfolio of sorts.  Like the elements of a sound investment portfolio, each reward element can and should be designed to accomplish a specific objective or purpose.  Taken together, there should be a sense of balance in the design and interaction of the different reward plans. 

To help illustrate this idea, I find that a picture like the one below to be helpful in generating good discussion about overall reward program design.

Consider, for example, the organization that retained my firm to review its current management incentive plan and make recommendations for improving it, as appropriate.  After examining their plan in the context of their overall reward program, I drew a diagram like this:

All elements of their current reward program were designed to recognize and reinforce individual performance.  In an organization that claimed teamwork, particularly among its senior managers - was essential to its success, this was a strategic gap.  As an initial step in addressing this gap, we introduced a set of organization-wide performance measures to the management incentive plan, so that this reward element served the purpose of signaling the importance of the top team working together to accomplish organizational goals.

And then there's the case of the organization with the overloaded incentive plan.  The diagram I drew for them looked something like this:

Every behavioral change and performance outcome possible was written into this incentive plan.  It was as if this plan, and this plan alone, held all responsibility for steering and managing employee performance.  All other reward elements had been overlooked.  It was way too heavy a load for one plan to carry.  Our task there was to reach a clear consensus on the one or two objectives that we could reasonably expect the incentive plan to accomplish, and to assess whether other objectives could be assigned to other elements of the overall reward program.

To make things more interesting, the diagram can be expanded on the right side to include other elements of total rewards (i.e. benefits, training opportunities, etc.) and on the left side to include other desired outcomes (i.e. skill/competency development, cultural change, etc.).

What would a reward diagram for your organization look like?

Comments

[Almostgotit]

This post is gorgeous (visually as well as conceptually. I really am LOVING your new "look"!)

I like the idea both of thinking of rewards as a multi-part, multi-functional "portfolio" -- and then actually drawing pictures of it. I'm thinking of one of my recent sets of job interviews (oh... one of SO MANY! :) where it became very clear that the main function of the company's totally wacko incentive plan was to violently undermine every bit of the "teamwork" that the founding CEO waxed so poetic about -- and desperately wanted me to fix for him, without requiring him to make any changes at all himself.

I don't know if drawing pictures would have helped him. But maybe once I had seen the results myself when they looked like this:

>

I'd have been able to acknowledge, much sooner, that I truly WAS in the room with a crazy person.

Not long after I refused the job, I found out that the company had, indeed, exploded. I also found out that it was the second company Mr. LaLaLa had started and destroyed. I believe he now works the subway station in Times Square, assaulting commuters and forcing them to listen to lovely ballads about world peace which he plays on his ukelele.

[Ann Bares]

Almost:

Thanks for the comment, particularly the affirmation that the pictures worked. I had second thoughts after I posted them. I am still on my learning curve with the whole visual thing!

[Frank Giancola]

Ann,

Very effective graphics and approach. Thanks for sharing.

Frank

[Michael Haberman, SPHR]

Ann.. this is a fantastic explanation! One thing I think you could change however, which is, don't call it a program, call it a system. Program mentality does not make the connection between other parts and the strategic direction of the company.

[Ann Bares]

Frank:

Thanks for the comment - glad that you feel they are effective!

Michael:

Thanks for your visit and comment as well. You make a good point. I have a sloppy tendency to use the terms system and program interchangeably - and the distinction you make is a valid and important one.

[Wally Bock]

Congratulations. This post was chosen as one of the five best business blog posts for this week on my Midweek Look at the Business Blogs.

http://blog.threestarleadership.com/2008/03/26/32608-a-midweek-look-at-the-business-blogs.aspx

[Ann Bares]

Thanks, Wally - always an honor to be featured on your Midweek Look!

[Paul Hebert]

This is great Ann - I may need to "borrow" it the next time I'm talking about rewards and recognition. If so - I will provide attribution!

By the way ... I have tagged you for your 6-word memoir. Have fun and I hope you play.

http://incentive-intelligence.typepad.com/incentive_intelligence/2008/03/decades-into-6.html

[Ann Bares]

Thanks, Paul - have at it!

The 6 word memoir is a challenge (who thinks of these, anyway?) - I will put mine up as soon as I can come up with something suitably brilliant (as if!).