Reward Systems

This book relies on a simple observation, namely that the presence of behaviors considered counterproductive is very often the direct result of a defective compensation system. It is indeed disconcerting to note a frequent disconnect between the behaviors that a company wants to promote and those that the recognition system actually rewards.
In this comprehensive and structured book, the author distinguishes three key steps toward establishing a successful and efficient compensation system. Each one of these steps is studied in a dedicated chapter.
The company must first define what it means by performance, so that each employee knows what he or she is expected to do to meet expectations. This requires breaking down the vision, mission, objectives and priorities into concrete initiatives for employees.
The second step consists in defining the measurement system to track progress toward these objectives. This system is the foundation upon which the compensation system stands. Thus, efforts to modify the reward system before the measurement system is reviewed are doomed to failure. Steve Kerr proposes an interesting checklist of the main dilemmas to resolve at this stage, e.g.: Should the company use a ranking or rating system? How can it find the right balance between the need to monitor performance and grant autonomy? Etc.
The final chapter provides practical suggestions on evaluating the effectiveness of the compensation system. Initial relevant questions include: Are we compensating performance in the most suitable manner? In particular, are we capitalizing on the full power of non-financial rewards? Moreover, does the existing compensation system reward what it should? In other words, does it reward what we want to get from our employees? According to the author, comparing the desired system with employee perceptions is the best way to find out.
This book constitutes a welcome guide for any company that wants to think more deeply about the performance of its compensation system. That being said, the lack of illustrative practical examples observed in real-life business situations is somewhat regrettable.