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Beyond Market Pricing:
Success-Based Compensation
It used to be an advantage to be big. Now, success depends on being fast. Organizations
need to take advantage of their scale and their agility, as well as new tools
for business transformation and success. And compensation needs to be related
not to fixed jobs in static organization structures, but to the capabilities
of individuals in the organization to contribute to business success in today’s
turbulent times.
Succeeding In Fast Times
It used to be an advantage to be big. Big businesses were able to use economies
of scale and market dominance to compete in national and international markets.
Big governments were able to dictate tariffs and terms of trade in the controlled
economies of the 20th century. There was no great need to be fast. The aims of
organization and management systems were order and control, rather than speed
and adaptability.
Now, times are very different. Thomas L. Friedman in his new
book, The World Is Flat, points out that the lowering of trade and political
barriers and the exponential technical advances of the digital revolution have
made it possible to do business, or almost anything else, instantaneously with
billions of other people across the planet. Just when the US had stopped paying
attention, in the post-9/11 era, technology and globalization are transforming
the world, and one third of the world’s population has caught up – over
night.
Success now depends on fast, fluid operations. Smaller business units are
more suited to this situation than large corporations. As one sage puts it,
“It’s
not the large that shall eat the small, but the fast that shall eat the slow.”
In order to succeed in the uncontrolled economy leaders must focus intently on
four particular areas:
- CUSTOMERS: how to win and hold their preference
- TECHNOLOGY: how to use it
to leverage knowledge and creativity
- TALENT: how to attract, hold, align and energize talented people
- HEADLIGHTS: seeing the implications and opportunities stemming from
a rising wave of scientific discoveries and new technologies (hyperknowledge).
In conventional organizations, all the above factors are either ignored or
approached in ways that tend to fail and keep failing. Talent is an example.
Salaries are seen as the key to attracting and keeping people. When the best
people keep leaving, despite high pay, the employer raises salaries even higher.
But that doesn’t work either. Sound familiar?
In a seller’s market,
high levels of compensation for talent are a given. If you want truly talented
people, you have to be prepared to pay. But, creative knowledge workers typically
seek more than a competitive salary level. They want to work for a business that
they can relate to, where their talents are valued, rather than being treated
as cogs in a machine. It then comes down to the type of culture that exists in
your business. Is the culture hierarchical and rules driven, or is it organic
and values driven?
Read the full article:
Beyond Market Pricing: Success-Based Compensation
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Brian Hinchcliffe
Kurru, LLC
Brian Hinchcliffe is a seasoned organization consultant and human
resources practitioner, with particular expertise in compensation systems, leadership
development and coaching, organization realignment, and career transition. He
has consulted extensively, working with companies across a wide range of industries
in the US, Australia, Asia, Middle East, UK and Europe. Brian is CEO of Kurru,
LLC, and holds an MBA, as well as a Bachelor’s degree in Psychology. He
can be reached at brianhinchcliffe@kurru.com or
(972) 824-8330.
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