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HR Can’t Afford to Ignore Compensation

A generous person gave three business partners $1 million and said they could use it however they wanted. The only caveat was that the business plan allocated 70% of the money to predetermined overhead. This could be reduced to as little as 55% if the partners planned and executed carefully. While all three individuals agreed to accept the money, they had very different ideas on what to do with it. The first partner, wanted to execute the business plan as written. Tom believed the overhead was justified and wanted to move forward with the business. The second partner, Nicole, wanted to cut the overhead budget by 10% across the board. She hoped that putting the additional money into business growth, it would make up for whatever was cut. Now that the team had access to the additional funds, the third partner, Ilana, wanted to reexamine the budget. She thought that careful planning and execution may save them as much as 10% while providing 15% better results.

Tom was excited and anxious to get started on growth. Nicole was exhausted and just wanted to proceed and stop talking about things. Ilana was excited, but she knew they only have one shot at setting themselves up for success. Ilana laid out a plan that showed how small strategic adjustments to the plan may result in big results. She also created a tactical plan that would support both the changes and continued growth if executed properly. Luckily, Ilana had the data, information and communication skills to convince Tom and Nicole to take a chance on her approach.

The company executed Ilana’s plan with passion. They created and purchased systems that ensured progress and compliance. The success they experienced inspired other strategic decisions. Increased understanding of Ilana’s approach resulted in better interaction between the partners and their reports. People had time to explore new avenues and the company thrived.

In the end, the company turned the $1 million into multiple times that amount. Each year they looked for new ways to strategically use their revenue while developing better methods for managing and executing their plans. They told funny stories about the limited vision of their original plan and laughed about how they almost made the mistake of doing things like everyone else.

Every HR department can choose to address their objectives like Tom, Nicole or Ilana. Each approach has merit and each may result in success, but only one approach is designed from the outset to ensure success.

Ask us how you can improve your strategic planning efforts and build more effective compensation execution.

Performensation is a unique management consulting firm. We engage leaders to create human capital strategy and reward programs that drive firm performance. We align pay with your corporate strategy and culture.  We design employee reward programs to improve your organizational performance. Our end-to-end approach guides you from diagnosis and design, through execution and adaptation. We work well with companies with unique and unusual needs to deliver solutions that work.    Web: www.performensation.com

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