· 2 min read · Features

From the front line: Be a real force to be reckoned with


Commentators have invested rewards specialists with the power to topple the global economy.

The morning after being bitten by a genetically-modified spider, geeky teenager Peter Parker wakes to find his life transformed. His poor eyesight is now so super-sharp he no longer needs glasses. His puny muscles are so super-strong he can send the school bully flying with a single blow.

At the beginning of the 2002 film, Spider-Man, actor Tobey Maguire captures brilliantly the emotional impact these changes have on Parker. You see the excitement on his face turn into confusion and then, as the implications of what is happening to him sink in, fear about what the future may hold.

And I am sure many HR professionals with responsibility for compensation and benefits will have experienced a similar emotional roller-coaster when Stephen Green, chairman of HSBC, recently told the BBC that financial sector remuneration programmes were one of the main causes of the credit crunch.

Think about it. One day those unassuming specialists are working through the minutiae of the company's healthcare policy and the next - Kapow! - they are fully-fledged superhumans with the power to topple the global economy. But this is no comic book story - Green's analysis is, I believe, spot on.

Stating that he felt pay and bonus schemes did not reflect long-term performance within the sector, Green said "there has been far too much focus on payments that are very short-term focused ... ". He concluded that transactions should be rewarded handsomely only when they yielded sustainable profits for their organisations.

This is a problem the best comp and ben specialists are trying to resolve every single day - how to avoid falling foul of the law of unintended consequences.

Neal Blackshire, head of comp and ben at McDonald's sums up this law succinctly: "When you incentivise one set of desirable behaviours you will - albeit unintentionally - also encourage further behaviours that have consequences for the organisation. "

One of Blackshire's responses has been the development of a bonus framework: an unchanging architecture for incentive payments into which a range of Key Performance Indicators (KPIs) can be inserted. As a result, employees know there are five KPIs that will trigger quarterly and annual bonuses if the targets for these indicators are reached, and how big those incentive payments will be. However, they also know that the specific KPIs are constantly being reviewed, and may be changed if striving to achieve one is having a negative impact elsewhere in the business model. It is a system that has the capacity to be easily fine-tuned to ensure that the behaviours it rewards are those that will ensure the long-term prosperity of the organisation in an ever-changing economic climate.

But for comp and ben specialists to steer their organisations away from the jaws of the law of unintended consequences, they need to have a profound knowledge of the working of the business model. Otherwise how will they know what inappropriate behaviours look like?

Here Blackshire has an advantage: he started his career with McDonald's working in and managing restaurants, and has also maintained a close working relationship with the operations teams over many years. How many comp and ben specialists in the financial sector can lay claim to the same?

In Spider-Man, Parker's uncle reminds him that "with great power comes great responsibility". And in a global economy where the fate of most organisations is determined by the behaviours of its people, I believe it is HR's responsibility to help the organisation shape those behaviours. As a result, we must ensure all of our HR teams are able to invest the time and energy it takes to gain as intimate as possible an understanding of what makes the organisation tick. Then they too will have what it takes to become superheroes.