The
2012 Olympic Games are over. It was an
inspiring 17 days, filled with accomplishment and emotion. It was also filled with great lessons on
Strategy Execution, including one of the best on Aligning Compensation and how
the right compensation model drives desired behaviors.
Think
about the medals. Is there any better
example of an aligned compensation model than a gold medal? It’s so very simple: If one performs better
than one’s peers, one earns a medal (and the others don’t!).
Lesson One: Keep it simple
Even
in the most complicated of sports, like decathlon or gymnastics, the medal-based
compensation model didn’t change. Yet the behaviors sure did! You didn’t see Missy Franklin practicing the
shot put, Gabby Douglas kayaking, or Ashton Eaton on the balance beam. But why?
Each of those behaviors earned someone
a gold medal. The answer, of course, is
to align compensation that drive behaviors relevant and important to each
individual’s responsibilities.
The key
is clarity of expectations. Each “job”
(or, in this case, Olympic event) has its own unique set of metrics. Ashton Eaton, the gold medalist in the
decathlon, wasn’t going to be measured on
his balance beam performance. Nor did he
(or his manager, er, coach) believe that practicing the balance beam was going
to enhance his ability to perform on those activities where he was going to be
measured. So – understandably and appropriately – Ashton only focused on those
activities that would directly contribute to his success.
Lesson Two: Clear expectations
Lesson Three:
Measure behaviors that make a difference
Because
of the uniqueness of his job, the behaviors that would lead to his success were
not the same as those that would lead to Missy’s or Gabby’s.
Lesson Four:
Make sure the behaviors being measured drive the desired result.
(Quick
Quiz: What are the ten sports that make
up the decathlon? Your answer is here).
Last,
note the simplicity of the compensation model as opposed to the complexity of
the metrics. Nobody won 1/3 medal in the
vault because they had the best landing while someone else won 1/3 for having
the best “in air” maneuver. No – the
person who received the gold medal had the highest combined score for ALL the
metrics. They couldn’t ignore one skill and
focus on the others; they had to practice and be good at all components being
measured to receive the desired “compensation.” Perhaps a better example is to
stay with the decathlon: There are no
medals given in that sport to the person who wins each individual
component. The only medals are given for
total scores at the end of all ten elements.
Lesson Five:
Keep the reward simple – and make sure it is based on ALL of the behaviors you want to encourage.
Bottom line: If you
want world-class Strategy Execution, make sure
1) Keep it simple
2) The rewards are clear
3) The desired behaviors are clear
4) How the behaviors will be measured is clear
5) Rewards aligned fully with desired behaviors
…and get out of the way.
Posts
