If you run a business, you likely have a clear vision of the possibilities--what could happen, "if only..." However, if you are like most CEOs, you may not have yet accurately diagnosed the problem that is holding you back from that next performance threshold of growth and success.
Our experience has been that for every business leader that can identify and address root results barriers, hundreds only see and focus on the symptoms. Consequently, their course corrections are based on erroneous assumptions about the core problem.
Which kind of leader are you? To assess, here are a few key questions to consider:
- You have worked hard to develop a strategic business plan....but are your key people consistently executing on key performance initiatives?
- You have nurtured loyal employees and low turnover.....but do your employees think like owners?
- You have screening processes to ensure you hire good people....but do you have a value proposition that will attract the BEST talent?
- You have built a culture that is committed and works hard.... but are your key people clear about expectations, outcomes and rewards?
If the questions above reveal gaps in your business, then it is likely that your success barrier is tied to an enemic or even non-existent rewards philosophy and strategy--at least in part. You are probably not yet seeing compensation as a strategic solution to fuel growth. Compensation is being treated as an expense that has to be managed instead of a capital investment that should drive specific, measurable results. Such a disconnect between your business plan and rewards means you are communicating one thing when announcing goals, objectives and performance expectations, but something else when you send out the paychecks. As a result, there is no organizational "line of sight."
A world-class compensation program is one that transforms the performance of employees and engenders an ownership mentality throughout the organization. It aligns the shareholder vision with the employees' vision. World-class compensation programs unleash a level of passion that leads employees to have greater focus on key performance indicators and initiatives.
Such focus creates greater execution, which is the key to breakthrough growth. Why?
Increased execution creates success patterns that engender a culture of confidence, the foundation of a competitive advantage. Once success is sustained, you have built a culture that is self reinforcing. You have also developed something that no one else can replicate; because culture is not "copyable."
While effective rewards are not the only factor needed to fulfill this ideal, breakthrough results will never be achieved until a world-class compensation program is in place. It is a "show me the money" issue, but not because people are solely motivated by financial rewards. Rather, it's a matter of strategy and continuity. How can you tell your employees you have a three-year plan to grow from $75 million to $100 million in annual sales revenue (or other meaningful measure) and have no component of pay that rewards your people for that achievement?
In short, show me how your people are paid and I will tell you what performance expectations you have set. It's as simple as that. For too many growth oriented companies, ineffective, unaligned compensation is their core success barrier--but they continue to look elsewhere for the solution.