It’s 3AM and it’s almost pitch black outside. The damp chill of the dead night air is on your bare arms. You can barely see your hand in front of your face. An unseen voice tells you will be running a full marathon. Suddenly someone points you in a direction and tells you run as fast as you can.  Then they disappear. How fast would you run?  How long would you run? At what point would you simply stop running and wait for daylight? Performance-based compensation plans are hailed and railed against on a regular basis. For every article or whitepaper that explains how well they work, there is another revealing how they are ineffective or even counter-productive.  Today’s post is not about convincing you of the merits of merit pay. It is about dealing with some simple tactical aspects of these plans that often determine their success. To put it simply, this post is about coaching and mile markers.

Consider the scenario above one more time.  Now imagine that instead of running by yourself in the dark, you are running with a coach who is guiding you along.  At regular intervals you are told how fast you are running and how your competitors are doing.  The light in the distance that was so dim at the start is slowly becoming brighter and larger every step. How fast would you run? How long would you run? At what point would you start sprinting for the finish?

We often ask our employees to run in the dark for an undefined reward. We leave them alone to their tasks and hope they can gauge their own progress while simultaneously monitoring their peers and competitors. My Compensation Café colleague Jim Brennan stated it clearly in a recent posting. “Pay is a Scorecard.”  Since, at some level, compensation defines success in the game of business, it is essential we provide employees with the coaching and measurements they need to monitor their progress. Even the best athletes have coaches.  And, every sport keeps score throughout the contest, the season and a career.

Consider the scenario one more time. Now imagine that you have hundreds of teammates lighting the path for as far as you can see.  Each of them is providing feedback and support as you run. Your coach has provided someone to pace you for each stage of the race. You are not only given measurements along the way, but also advice on where to conserve energy and when to push hard. You have clear sight of your competitors and understand that they do not have the same support and team. How fast would you run?  What would be your winning margin?

It is, of course, more expensive and more effort intensive for a company to provide full support of performance-based compensation programs. This is no excuse to provide less. Rarely do we remember the competitor who didn’t win. We also seldom have a clear picture of the team that supported the winner, however there is no doubt that the winner had excellent support to go with their passion, talent, skill and effort. The next time you wonder why your performance program is not working well, ask yourself: “Are my employees running in the dark?”

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Compensation Top Chef