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That is not a VisionLink claim. It’s the claim of Jean Martin and Conrad Schmidt, both of the Corporate Executive Board’s Corporate Leadership Council in Washington, DC, as reported in their Harvard Business Review article–May 2010 edition. The claim is based on research done by the Leadership Council in September of 2009. It’s a staggering statistic.
Following that claim, the authors proceed to delineate the six most common errors their research produced that contribute to this outcome: 1) Assuming that high potentials are highly engaged; 2)Equating current high performance with future potential; 3)Delegating down the management of top talent; 4) Sheilding rising stars from early derailment; 5) Expecting star employees to share the pain, and; 6) Failing to link your stars to your corporate strategy.
That last mistake (not creating links between key people and strategy) is also the basis for three of the 10 core set of best practices the article goes on to define for identifying and managing key talent. It is likewise reflective of the central philosophy VisionLink espouses relative the development of World Class Compensation. Creating great rewards strategies does not begin with a discussion of compensation. It begins with a discussion of vision, strategy, roles and expectations. Rewards should be an extension of that train of thought.
Here are three of the best practices identified in the article, and VisionLink’s observations about each.
- Create individual development plans; link personal objectives to the company’s plans for growth, rather than to generic competency models.
VisionLink Observation: Compensation in high performing organizations is one of the tools that forges this link and advances a unified financial vision for growing the business. Employees will understand this connection (between personal objectives and the company’s growth plans) if they feel a sense of partnership in their business relationship–financially (through pay) and otherwise.
- Reevaluate top talent annually for possible changes in ability, engagement, and aspiration levels.
VisionLink Observation: Performance is not static and pay for performance isn’t either. A compensation philosophy should clearly define what a company will “pay” for and practices must bring that philosophy to life. Evaluation tools should be employed at least annually to assess engagement and aspiration levels to determine the level of alignment that is taking place.
- Offer significantly differentiated compensation and recognition to star employees.
VisionLink Observation: This is the basis of a pay for performance philosophy and the heart of world-class compensation. Star companies are fueled by star employees. If the business is performing above the market, premier talent will know that, and will expect to be paid accordingly. If star performance isn’t being achieved, review the previous bullet point.
As companies begin to emerge from the deep sleep imposed by the recent economic slump, they would do well to make sure they are avoiding the mistakes Jean Martin and Conrad Schmidt have identified. Equally, they should ensure they are well poised to employ the critical components of a world class talent-development program.
