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 »  Home  »  Organization  »  Ensuring That Your Reward And Performance Management Systems Do Not Create Compensatory Damages
Ensuring That Your Reward And Performance Management Systems Do Not Create Compensatory Damages
By Brian Gagan | Published  02/2/2005 | Organization | Rating:
Brian Gagan
Brian is a Leadership Strategies, LLC partner and holds management and human resources degrees from the University of Maine and Syracuse University. He has lived throughout America and in Europe and his background includes large business unit management experience and more than twenty years in the human resources arena. He maintains an active role with several Board appointments and he has worked with companies in nearly all business sectors, large and small, domestic and international. He has held executive and officer positions with The Maine Medical Center, Burger King Corporation, The Pepsi-Cola Company, and Blockbuster Entertainment Corporation. Some of Brian’s primary areas of specialty are mergers and acquisitions, elimination of organized labor influences, organizational structuring, senior executive performance improvement, board functionality, international expansion, executive compensation and perquisite design having a direct effect on organizational financial performance improvement, and peaceful elimination of human capital performance roadblocks. 

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Introduction

A universal and expensive challenge for each and every business around the globe is that of compensating employees for their efforts. This challenge is more complex in the United States than in most other countries due to the convergence of federal, state and local laws and because of the presence of many pay methods within U.S. business. Unfortunately, many organizations pay their employees only for their "efforts" rather than for their "results". More importantly, the most effective guiding principle of compensation. . .that organizational results are much more important than individual results. . .is not currently evidenced at any level within the compensation systems of the vast majority of organizations.

 

"Compensatory damage" has hugely detrimental effects to the financial performance of the organization. It results in significantly reduced human productivity, increased human conflict within the organization, perceptions of internal unfairness, disconnection from customers, excess variable costs, and diminished financial performance. It has a tendency to go unnoticed, however, during periods of increased revenue and/or profitability and is easily temporarily overshadowed by macroeconomic forces.
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