wardell books

Compensation and Your Corporate Culture

Along with your managers, your goal should be to create a corporate culture that is fertile soil for productivity. In terms of human resources, there are five key drivers that you need to consider. They are:

  • Systems
  • Capability
  • Structure
  • Technology
  • Rewards

By focusing on the ways in which your employees interact with these drivers, you can design a compensation strategy that will produce a flourishing culture of productivity.

A. Systems - The systems your business uses to carry out the work of your company. Think about the way your employees interact with the various systems in your business. If you own a chain of retail stores, for example, you will have systems to open and close your stores at the beginning and end of every day. The relationship your employees have with these systems says a lot about the culture in your business. Do your employees know, understand and execute these systems with precision, or do they make things up as they go along, completing each task in a different way each time? How do your employees interact with a particular system, like bringing a new product to market? Your systems drive your corporate culture because they have such a strong influence on what gets done and how things get done in your business. There may be ways the design of your pay systems will effect your employee' relationships to the systems that drive work in your business, and therefore have a direct impact on productivity. If systems are important to your work environment, you may want to develop a pay system that reflects their importance by rewarding employees who correctly implement or improve them. What compensation systems changes could enhance or grow your desired culture? Make your notes below.

B. Capability - The skills and knowledge needed to execute systems. Do your employees seek out new SKCs that will advance their personal careers and benefit your company? For example, in the world of software development, things change very quickly. A culture that encourages developers to learn new technologies will be much more productive than one that's indifferent. If there are pay systems that incentivize your employees to obtain new skills, knowledge and capabilities, the culture will be one that enjoys and encourages professional growth and, along with that, productivity. Make some notes in the space below with some ideas you could implement that would encourage new Skills Knowledge, and Competencies (SKCs).

C. Structure - The design and organization of roles and jobs, functions and units. Some businesses are structured very traditionally with well-defined hierarchies, responsibilities and subordinate relationships. People refer to this as a vertical structure. Other businesses have a "flatter" horizontal structure with few managers, and not a lot of steps between the bottom and top of the organization. The type of structure you implement in your company obviously has a big effect on the culture that grows there. For example, you may compensate some of your people based on team performance, or you may have a bonus structure in place for your managers. How could your compensation systems reinforce this? Make some notes below on how you see this happening in your business.

D. Technology - The tools, equipment and technologies used to get work done. How do your employees interact with the technologies they use everyday? For example, if they could be used to improve efficiencies, you could consider paying for smart phones for your sales team. Is there a culture of continuous improvement and professionalism associated with the tools they use? How could your pay systems reinforce and grow this culture?

E. Rewards - The strategies used to motivate and reinforce the achievement of results. How do you use rewards to motivate your employees? Do the rewards you currently offer have a motivating effect on individuals in your company? Do they have an effect on the overall culture? Examples of rewards are things like gift cards, trips, or even money. Take a few minutes to make some notes below on new ideas to motivate with rewards.