I have had a few debates with compensation consultants about the merits of integrating an organization’s employee bonus plan with its
strategy map,
balanced scorecard and dashboard metrics program. I wrote about this topic in May, 2006 in my article titled,
Accountability and Incentives for Rewards: How Disconnected Are They?
A success story that validates my thinking appeared in an article titled
Pioneering Performance Pay written by Robert Kirkner, the chief human capital officer at the US government’s
National Institute of Standards and Technology (NIST). Robert describes how, twenty years ago, NIST developed a bonus pay system based on quantification to differentiate over-performers from under-performers. And being good scientists, NIST has continued to refine the methodology to strive for that cause-and-effect outcome any organization should desire. That is, to motivate employees well in harmony with the organization’s strategy to align their behavior with desired strategic results.
I have had dialogs with Chris Ellis of
Sibson Consulting, specialists in this area, as to why some compensation consultants do not advocate that organizations should link their balanced scorecard key performance indicators, or KPIs, to bonuses. Chris too is surprised and thinks like me. It appears there is a perception that such a system would be too quantitative and scientific. Maybe like NIST has done, they compensation consultants should apply a little science.
