Money Isn t Always the Answer

Money Isn't Always the Answer

We might have titled this chapter, "When Is a Compensation Problem Not a Compensation Problem?" When problems arise, managers often have a knee-jerk response that leads them to focus on compensation. But many times the problem is dysfunctional behavior that might be caused in part by a compensation problem and have other root causes as well. Simply changing compensation (which always means raising it) may not achieve the desired result. Using the cone analysis method gives you a way to look at all the variables simultaneously. If you think a team member is out of the cone, the first thing to do is determine which of the eight boxes he or she is in. Then, and only then, can you proceed with a solution.

Doing this kind of analysis is also a reminder that we need to better understand the coupling between development plans for individuals and their compensation trajectories. Dealing with either of these without careful consideration of the other is worse than just solving "half the problem" at a time. Unless you take a gestalt view of the situation and formulate a plan that considers skills progression, job difficulty, and compensation together at one time, both parts of the equation will probably come up short. The cone methodology provides a coherent way of looking at the whole picture and helps us do a better job of retaining and developing team members, and improving their productivity.

A very senior manager^[14] read a draft of this chapter and remarked, "I think it's a great point that needs to be made, but I'm terribly afraid that managers will misunderstand the importance of matching assignment, skills, and motivation to optimize results. If assignments are made on the basis of compensation, it's a disaster. In fact, compensation is irrelevant to making the right assignment; optimal compensation should result from optimal assignment, and not the other way around."

^[14] John Lovitt, who was responsible for Rational Software's Field organization for many years.

So, with this order of priorities in mind, one answer to the koan^[15] of correct compensation is the cone of correct compensation. Use this technique to get people in the right jobs with the right skill levels, and motivate them for optimal performance. Once you do that, it is easier to get their compensation right.

^[15] The Concise Oxford Dictionary defines a koan as follows: "Riddle used in Zen to teach inadequacy of logical reasoning. [Jap., = public plan]." The atrocious pun notwithstanding, I hope I have shown that correct compensation does not have to be a riddle immune to logical reasoning.