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Flatworld I have a favorite quote…

"It's not what you don't know – it's what you think you know that isn't so that causes problems."

That axiom has allowed me to seem intelligent in meetings and helped me find solutions that others can't see.  It's simple – ask the question – "is what we're basing this solution on still true?"  Often it isn't – sometimes it is.  In either case – you come out ahead.

I've posted in the past about different rules of thumb used in the incentive industry – and why I think they've expired.  My current column on Incentive Magazine is a sort of compilation of those posts and is a good place to start when thinking about planning your incentive and reward program.

I urge you all – please do not fall victim to the using rules of thumb that no longer apply.

Click over and read the article (FYI – it will also be in the print edition next month.)

 

  • http://www.lanterngroup.com Kurt Nelson

    Paul,
    I really like your thoughts on this – yes, the old rules of thumb no longer apply (if they ever did). The one area that I might slightly disagree with you is the amount spent on communication(I have a bias here – we do a lot of work communicating IC plans). I agree that while there are a number of new avenues for communication, and that many of those avenues have a lower threshold cost, the importance of communication is even more so today given the plethora of data and information that is sent to employees. My belief is that communication costs should be looked at the same way you look at overall program costs – what are you trying to achieve and what is required to achieve that goal. This means that you need to understand the audience, the culture, the complexity of the message, how much you are asking people to change, and what you want them to do differently, etc… While in many instances, this can be achieved electronically and “cheaper” than traditional print, other times it cannot. The cost of developing your communication campaign should not be minimized just to save dollars, but only if the desired objectives are achievable with the reduced cost. My mantra is that you can have the best incentive plan/program in the world, but if nobody understands it or if they don’t buy into it, it won’t drive the results that you expect.
    Would love your thoughts on this.
    Kurt Nelson
    The Lantern Group

  • http://profile.typepad.com/2of6 Paul Hebert

    Kurt – thanks for the comment. I noticed you submitted two comments – the newest had a few minor changes so I’m assuming you only want the most recent.
    I may have misled a bit in my article. My point wasn’t that we should abandon print – or that we should reduce communication spend. What I’m saying is that the rules associated with the costs of communications and the application of communications have changed tremendously. I would even submit that companies should INCREASE their communications effort (not their budget necessarily or their print) but the number of touches and the impact of those touches.
    All of the things you mentioned need to go into the communication development strategy.
    The key take away – communications is different – the application is different and therefore, the budgeting and the tactics need to be different.

  • http://profile.typepad.com/abares Ann Bares

    Great article, Paul. I love the Levitt quote – so often we get the cart before the horse in our design efforts.
    I found your thoughts on “Budgets Should Not Be a Function of Participants’ Income” interesting. Your points are all great ones, particularly as we look at non-cash incentives. On the cash side, it can be hard to avoid at least considering what we are doing as a function of income, because we are looking at a total competitive dollar package and having to decide how much to provide in fixed (i.e. base salary) income versus variable (i.e. everything that’s at risk based on performance) income. I believe our total rewards strategizing needs to cover both cash and non-cash elements, so perhaps we just incorporate them in different ways? Thoughts on this?

  • http://profile.typepad.com/2of6 Paul Hebert

    You bring up a good point Ann. My article was focused pretty much on just the non-cash side of the reward equation – which typically isn’t a component of the compensation equation when comparing market comp packages. And I don’t think it really should.
    I firmly believe the non-cash programs and the engagement activities a company uses should be tied to the company-specific mission/values and therefore couldn’t really be compared apples to apples. Also, those things provide an advantage to some companies outside the compensation world which give them more flexibility.
    While a “total rewards” picture for the employee is important – I don’t think it should be included in determining market comps for compensation. It would really muddy the water – and truthfully – when negotiating for the job – non-cash is discounted (even though over time it is more important).

  • http://www.lanterngroup.com Kurt Nelson

    Paul,
    Thanks for the clarification – I agree 100% that companies often need to increase their communication effort – to make sure that employees are understanding and buying in (and again, this doesn’t have to be more expensive, just more strategic).
    Keep on pushing the envelope for people to look beyond the “old rules.” I look forward to more posts about this and what does the “new” world look like.

  • http://employee-rewards-incentives.blogspot.com/ Kye Swenson

    I really like your ROI example–I think it should be a pre-liminary step in creating all incentive or recognition programs. This enables management to experiment with clusters of different rewards and incentives as well, which eventually lets a company construct a program that really motivates employees to work hard and feel part of a tight-knit corporate culture.

  • http://profile.typepad.com/2of6 Paul Hebert

    Good point on the “what if”. Thanks for commenting Kye.

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