If a company is going to achieve this kind of alignment in the organization, it
must generate and monitor two critical passion measures within the organization
- functionality and vitality.
Functionality has to do with the philosophy and structure a company engineers to
create the right focus and ensure execution. In a rewards context, it is the
process of envisioning, creating and then sustaining appropriate rewards strategies.
Vitality has to do with the commitment, engagement and accountability level of employees
- particularly key talent that posses unique abilities. Are employees committed
to the company's future and its strategy? Is that commitment exhibited in
the way employees and performing? Are there accountability mechanisms in place
to ensure performance and make course corrections?
Companies that get functionality and vitality issues right typically experience
line of sight. Consequently, it is important that business owners be in tune
with the passion measures associated with their workforce.
When these passion measures are fulfilled, a company has a workforce that is "in
sync" and there is a synergy experienced in the results that are obtained.
That synergy comes from the combined focus of key people on the execution of key
performance initiatives. When this is aligned properly with compensation,
the results that are achieved by the company also generate a positive financial
outcome for those that produced those results. Everyone wins, therefore everyone
is committed and engaged.
To achieve this, a company must know and measure what is in the minds and hearts
of its key talent. Doing so will typically reveal what barriers need to be
overcome for greater line of sight to be achieved.
Obstacles to Achieving Line of Sight
Barriers to achieving the culture just described do not come in the same shapes
and sizes in every organization. That said, they do generally fall into certain
categories that are helpful to isolate so they can be addressed and a course correction
Obstacle Group 1 - Future
In this category, the company is experiencing a deficit of perspective about and/or
planning for the organization's future.
- The future company has not been clearly defined by ownership
- The future
company has not been clearly communicated to employees
- Employees don't see a
role for themselves in the future company
It is important for a company to determine whether or not its employees understand
the future of the company - and whether their understanding matches that of ownership.
Often, leadership in a company feels as though it has been very clear about where
the company is headed and what that means to employees, but a survey of the workforce
indicates otherwise. Don't be too assumptive about what employees understand
in this regard and don't expect employees to be compelled by a vision you have not
yet clearly articulated.
Obstacle Group 2 - Foundation
This barrier primarily exists in companies that have taken a reactive approach to
the development of their rewards strategies. They do not yet see compensation
as a strategic tool that can create alignment and line of sight within the organization.
There are no philosophical underpinnings for the decisions the company makes about
rewards programs. As a result, such an organization is often led to make ad
hoc decisions regarding compensation and benefits that are not linked to the growth
plans of the enterprise.
- The company has not established a consensus about how to use rewards programs to
accelerate company growth (lack of a rewards philosophy)
- A philosophy has been
developed butit has not been properly communicated to the employees
- A philosophy
has been adopted but it's incomplete or simply inadequate
Building a rewards foundation starts with the company's belief system. A rewards
philosophy should grow out of and be an extension of the company's vision, mission,
values and strategy. Companies that understand this have different compensation
struggles than those that don't. For example, their struggle might be with
striking the right balance between a short-term and long-term incentive plan - as
opposed to whether or not to have an incentive plan at all.
Obstacle Group 3 - Framework
Framework has to do with building compensation programs within an investment rather
than an expense context. Too many organizations still view rewards as a cost
issue that has to be "reigned in" as opposed to an investment fromwhich a return
is anticipated and targeted.
- The company does not view compensation as an investment and therefore has no way
to track or measure the return it is getting on that outlay
- The company has
a history/tradition of building rewards programs as independent units and not as
an integrated whole
- The company does not have clear standards (best practices)
or methods to set and reset values that are consistent with employee performance
expectations and company targets
The result of this barrier is the companies reap a harvest of mediocre execution
and probably very little passion on the part of their employees. This is because
the company is communicating one thing verbally about its vision and strategy, but
something entirely different with its rewards programs. In essence, they are
saying, "I want to grow this company from a $50 million to $75 million business
over the next three years - and I am counting on your help (Mr. Key Employee) to
get there." At the same time, they are also saying, "at our company, you will
be paid a competitive salary, be given health insurance and can participate in our
Just what about that rewards framework communicates to an employee - especially
one that is confident in his unique abilities - that he is essential to the growth
plan of the organization, or how he will personally benefit from helping the organization
realize its future company vision?
Obstacle Group 4 - Focus
A focus obstacle occurs in a business when there are good programs in place to incent
people to perform, but they are not understood, appreciated or impacting behavior.
Leadership in companies that are experiencing this phenomenon is often found scratching
its head while saying, "we pay our people in the 90th percentile of what the market
indicates for total compensation in our industry - yet our people are not engaged
and don't think like owners. There is no consistent focus on executing key
- The full potential value of the total rewards plan is not regularly and powerfully
- Only some of the plans (but not all) are built to generate "line-of-sight"
Company systems and personnel are not equipped to handle the annual management of
effective rewards strategies (they are reactive rather than proactive)
Often, companies that lack focus find themselves missing the mark in trying to solve
the problems they are facing. While they may need to re-engineer one of their
plans (or introduce a new one), they may just as well need to better support the
plans they currently have in place. Are performance management systems operating
effectively? Are incentive awards understood, promoted, celebrated and consistently
communicated? Are expectations and rewards clearly linked in the minds of
employees? Can employees see a path of confidence in their lifestyle through
the company pay programs and understood how they will participate in value creation?
If a company is going to overcome any or all of these obstacles, it must be able
to assess its current position and chart a corrective course for the future.
One of the key resources to tap in when making such an evaluation is the group of
key people that drive the success of the organization. For the most part,
these are individuals that want to see the company succeed. In that context,
they hope to grow and develop personally, professionally and financially.
Therefore, tapping into this resource to determine how best to move forward is critical.
However, it must be done in a constructive way that allows company owners to maintain
control and infuse thought leadership into the process.
The bottom line is that if the obstacles just described are not dealt with in your
- You won't have the capacity to recruit and retain the kind of employees who generate
meaningful change and growth
- You have not fully captured the potential contribution
of the people you do (and will) have
First Two Things to Measure
To come to a clear and productive understanding of where you stand with your employees,
it is our recommendation that you start with two primary assessments.
"4 F" Assessment
The first is an assessment of what we call your "4 F" condition. This measurement
is an evaluation of where you stand with each of the four obstacles summarized above:
Future, Foundation, Framework and Focus.
A "4 F Assessment" usually involves a survey of both ownership and key employees
soliciting a rating of certain crucial issues. Such a survey possesses essentially
the same rating statements for ownership and employees but frames them in the context
of their roles and associated perspectives. For example, some of the measures
solicited in such an assessment might include the following:
(Rate each statement on a scale of one to ten as it applies to your organization)
- Our people understand and believe in the organization's future. They find
- We have established clear compensation standards relative to
market pay and best practices; and we follow them
- The value and clarity of our
wealth creation opportunities engender a passionate ownership mentality
- I understand and believe in the organization's future. I find it compelling.
The company has established clear compensation standards relative to market pay
and best practices; and follows them
- The value and clarity of the company's
wealth accumulation opportunities have engendered in me a passionate ownership perspective
It is probably obvious that as company ownership compares its own responses with
those of its key people in this kind of process, some discrepancies will begin to
emerge. In addition, its own answers will quickly reveal areas of vulnerability
that need to be addressed if it wants to create a compensation program that is a
Understanding where your employees stand on the "4 F" issues is essential to building
a compensation philosophy and structure that will fuel growth. Fortune 500
companies spend thousands and sometimes millions of dollars analyzing their value
propositions in this way. You don't need to go that far to determine how your
company is doing and what changes need to be made to create greater buy in and commitment
from your workforce.
Net Motivation Score
The second type of assessment we recommend be done as a starting point in any organization
is designed to "take the temperature" of employees on certain key passion measures.
We do this by computing something called a Net Motivation Score (NMS).
The score is designed to help ownership examine three responses from employees:
- Clarity of the plan
- Believability of the plan
- Value of the plan
As with the Diagnostic, the NMS asks employees to rate their perceptions of their
compensation plan on a scale of one to ten. The score is then netted out to
determine a total measure for the employee group as a whole. The three assessment
statements employees are given are as follows:
- I clearly understand what personal and organizational results need to be
achieved in order to receive my targeted incentive award.
- I believe the
company can, and likely will, achieve the results that will enable me to earn my
targeted incentive award.
- It is important that we achieve our results because
my targeted incentive award is very meaningful to me.
You will note that these questions strive to assess three motivational issues with
regard to your employees and their compensation plan. One is the level of
understanding they have of results for which they are responsible. The second
has to do with whether or not they buy into the idea that the results can be achieved.
The third measures how meaningful the payoff is to the employee if the results are
Such "passion measures" often reveal hidden messages employees would communicate
if they felt they could. When not addressed, these issues can often result
at best in diluted recruiting, retention, and performance results.
Together, the "4 F" Assessment and the NMS help a company get a snapshot of both
functionality and vitality issues within the organization. Addressing these
issues properly can literally unshackle a company from the chains that keep it from
achieving its full potential. It is not an easy road to go down, but no one
should expect superior results without paying the price associated with their achievement.
Within every organization there lies the potential to achieve all of the goals it
wishes to fulfill. That potential is unleashed only when a clear vision has
been defined, a mission and values are in place, a strategy has been mapped, roles
and expectations have been aligned and a reward structure has been erected to tie
it all together. Execution and the culture of confidence that it engenders,
are the source of the potential each company has. Tapping into the source
requires listening, assessing, then engineering and executing. Those that
pay the price to accomplish this will shatter the ceiling of complexity that often
holds them hostage and lay claim on the fruits of success and competitive advantage
that all high performance companies seek.