I had a great conversation with a client yesterday who is working to shift her organization’s employee bonus plan from a purely discretionary one to one which will more directly engage employees in making the organization better.
This is an enormous change, as those of you who’ve done it or even contemplated it know. It goes right to the heart of the employee’s relationship with the employer — and to the core purpose of the pay program.
We talked about ways to have a conversation about this shift with top executives. I like to do it by positioning plan approaches as either value distribution or value creation in purpose.
This is not just a matter of semantics. While the two approaches can sometimes be difficult to distinguish by plan mechanics alone, they are different in significant ways.
A value distribution plan is a reward plan.
A value creation plan is a business improvement plan, and as such is wider and more ambitious in its scope, operation and impact. It involves compensation, yes, but it goes beyond that by seeking to involve employees in improving the operations of the organization. As such, its implementation demands greater levels of communication, information sharing, education and participation.
Value creation is the taller order, for sure. It is also the one more likely to generate genuine organizational performance improvement.
The trick, of course, is being clear and honest about which one you’re choosing. You can’t do the first and expect to get the results of the second. Value creation rarely happens in a big way simply by changing the way you distribute compensation dollars – and not changing how work happens.
See Ann Bares talk about A Look at How We Reward the Work of Today — and Tomorrow at TLNT’s Transform conference in Austin, TX Feb. 26-28, 2012. Click here for more information on attending this event.
This was originally published on Ann Bares’ Compensation Force blog.
