- A managed care organization wanted a compensation plan that had a correlation between performance and accountability
- They implemented Performance Management methods targeted at motivating employees and aligning performance with important goals at every level
- The result was a flexible compensation plan that avoided layoffs during down cycles and an aligned, top down focus on performance that achieves corporate goals
Corporate Wide Compensation Redesign
A design team made up of a cross section of employees creates a compensation system that identifies and rewards every individual, from executives to hourly associates, for activities that positively impact the achievement of corporate goals.
This managed care organization observed that its compensation plan, which included annual bonuses, had little or no relationship to individual performance and accountability. For years the firm had successfully managed its contract service providers through regular feedback and incentives for improved performance. Why, they asked themselves, couldn’t they directly link corporate goal attainment to the individual performance of their own associates as well? “We wanted an alignment of our compensation system from the top to the bottom,” explained the executive director of human resource management. “We already considered ourselves to be a high performing organization, but we truly believed we could use our compensation system to drive us to a new level.”
Since performance feedback, incentives and recognition for improved performance had worked well for the organization when used with its service providers, company representatives searched for an organization that could help them revamp the entire compensation system using such methods. They settled on Aubrey Daniels International (ADI), specialists in behavior-based performance technology. “We felt they had the best handle on what messages a company sends to its associates by the way it designs the compensation plan and on how an organization can change behavior,” a company spokesperson explained.
During the transition to a pay system based on individual accountability, the compensation planning team discovered that behavior change could be accomplished quickly using ADI’s methods. This highlighted the importance of up front specification of the right goals, delineation of the behaviors that impact those goals and communication about how those behaviors will be recognized in the compensation package. The final result of the effort is a flexible variable pay system that motivates employees and aligns performance with important goals at every employment level. Associates now know how to positively influence their pay through enhanced and targeted performance. Also, an all-employee survey reflects significantly improved overall satisfaction with the company’s pay practices.
Results of Intervention:
- Flexible compensation plan that enables company to avoid layoffs during down cycles
- An overall increased employee satisfaction with organizational pay practices
- Aligned top down focus on performance that achieves corporate goals
- Bonuses and compensation based on individual contributions to company success
“This variable compensation system drives the performance that achieves improved company results! Now that we have alignment throughout the company, we’re all pulling in the same direction.”
– Human Resources Director