In my book Without Warning, compensation is listed as one of five most likely areas silent problems reside. On the surface, this might appear to be in error. It isn’t. Compensation plans are created to drive behavior and results. Well designed and thought out plans should create focus and drive positive results. Likewise, poor plans would drive poor results.
Well over the past year, many compensation plans have come under scrutiny. Many that were perceived to be solid, were actually weak. For example, the financial crisis/meltdown primary catalyst could be tied back to compensation plans. For instance Bob Sutton in his blog writes about how the incentive plans at Washington Mutual was a driving force behind their financial collapse. A recent Wharton article discusses incentive plans that have gone. The reasons for incentive plans are logical, and difficult to argue against. After all, you want your employees to be focused and do their best work. However, creating an incentive strategy that drives results without being blindsided years later can be challenging. After all, we’ve all seen incentive plans go bad, which are really Silent Problems, just waiting to happen.
Tags: Compensatin, Uncategorized
