Compensation - Communication is Gasoline
Imagine buying a brand new car. You have spent months saving up and doing research. You have spent weeks going to dealerships and doing test drives. You even got your friend who used to sell cars to go to the dealership to help negotiate the deal. You spend a bunch of money and sign on the dotted line and the vehicle is yours! Heck, the salesperson even makes sure the tank is filled before you leave the lot.
Just imagine how successful that purchase would be if you didn’t ever fill the tank again. Somewhere on your way to pick up your long-awaited date, the car just dies. You coast to the side of the road. You call the dealership in anger and yell that they sold you a “lemon.” They come to pick you up only to find that the car is simply out of gas (petrol for you international readers.) They gently explain that you need to fill-up every time the gauge gets near the empty. You drive off embarrassed, better-informed and certain not to let that happen again.
Your new compensation program is the car. Your roll-out communications are the first tank of gas. The rest is the story of nearly every new program in the world of compensation. Communication is often viewed as a maintenance item. In truth, it is an essential component that makes compensation go. You know this and yet I’m betting a majority of your plans have not been refueled in months, maybe even years.
It’s probably not a coincidence that basic economy cars get better mileage than the fancy cars with all the bells and whistles. Those economy cars are designed for people who have neither the money nor time to be constantly filling the tank. But luxury cars are simply more comfortable. Typically, they are also bigger and faster and guzzle fuel. Compensation plans are much the same.
When a company is small its plans can be effective with fewer features and less communication. As a company grows plans become more complex, but our communication efforts seldom keep pace. We know what to do, and even how to do it, but we still expect the plans to succeed without the required fuel. Take an inventory of your programs. How often have you put effort into communicating each of them? Is it time to fill the tank (or tanks) of your fleet?
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He is a leading expert on incentive plan and equity compensation issues and has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.