Compensation, Behavior, and Business Growth

I’ve heard it so often stated that compensation drives behavior. It makes obvious sense doesn’t it? Then why do so many businesses overlook this very important fact when designing pay programs?

Three reasons: 1. It’s hard to manage and measure 2. Additional operational expense. 3. An unstated belief that everyone should do the right thing regardless of compensation.

Here is my response to those challenges.: 1. Clearly define outcomes and model it into software and 2. Any task worth doing is worth doing well 3. Some will rise to the occasion, in the short-term, but if this additional workload becomes the norm in the long-term without compensation, then it will only serve to undermine morale.

It is my belief that businesses must take the more challenging path of aligning compensation with desired behavior in order to survive and thrive in the end. An organization that follows this path will likely attract higher quality employees who are motivated by a reward for extra effort. However, more importantly, from a customer’s perspective, this organization will be more desirable to do business with given their better service and focus on satisfaction. These two results – more satisfied employees and happier customers – will most likely enhance the company’s bottom line with more sales and profits.

What do you think?

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