Change Management in Remuneration Interventions

                                                                                         

After attending a SARA breakfast presentation on Incentive Schemes and their “real” effectiveness in driving business performance, I am again led to consider the critical importance of effective change management in remuneration.The presentation revolved around the issues that influence how effective an incentive scheme can really be in changing business performance. Like any intervention related to remuneration, it was clear that the factors critical to its success were technical excellence in aligning the intervention with business strategy, performance management and ultimately the design of the scheme. But it became obvious in the subsequent debate and research references that the people dimension and people's perceptions of the scheme were the factors determining the ultimate success of the schemes being researched.This once again led me to consider the path of valuing change management in the remuneration environment. This is particularly relevant if, even in a stable environment such as one where an incentive scheme has already been put in place, the way that staff members perceive the scheme makes the difference between success and failure. Unfortunately, as is so often the case, it’s not what you do, but the way that you do it – and in this instance, the people you share it with!As remuneration is generally seen as a “numbers” discipline and is also typically driven by “number crunchers”, people tend to overlook the need for change management when making changes to policy, processes or – especially – to benefits. Getting a change right in any intervention concerning remuneration in a business seldom causes great excitement but – as I feel sure most HR people will readily acknowledge – over and above the often disastrous consequences of getting it wrong, if you do “get it wrong” you will never hear the end of it.Experience has shown that in most successful implementations, the component of remuneration change is often simply the result of a comprehensive process of change, addressing the areas of staff retention, trust, etc. Adopting a suitable change management process would ensure that any intervention, but in particular remuneration interventions, could be used successfully to help organisations address any number of the underlying emotional issues affecting an organisation's people.The recent Flexible Benefits transition undertaken with a client clearly illustrated the truth of these statements. The client's organisation had recently undertaken a number of changes to realign it with current market practices; but one of the preceding interventions included a change in the employees' conditions of service. This not only required consultation with staff from a legal standpoint, but it should also have been a valuable gauge of the business sentiment, staff members' trust level and their readiness for change. Unfortunately, for various reasons the “consultation process” ended up being solely the fulfillment of a legal obligation.With hardly any difference in the effort the client would have needed for a full-blown consultation process, by cutting corners the business created a high level of distrust, dissatisfaction and generally poor morale among its staff. The organisation's management only realised how badly employees had taken the change in their conditions of service when the business needed to undertake another intervention, this time the transition to a Flexible Benefits package. Luckily, this new intervention provided a perfect platform for the business to start the difficult process of regaining the trust of its employees, improving their morale and eventually achieving the goal of attracting, retaining and motivating the correct staff in the business.Unfortunately for this client, what is typically a fairly painless process of change management became an intensive tool for restoring morale: the remuneration change became almost an incidental by-product of change management. Although this is an extreme case, I am quite sure most HR practitioners can relate to these issues. Fear motivates most resistance to change, no matter whether the change is general or a remuneration change. This fear may be fear of the unknown or may be due to previous experiences or even external drivers beyond the organisation's control. Change management should be seen as a lever which can be used to modify the organisation and manage this fear. The key to how easily or well this lever works is definitely, as in physics, where the lever is placed, the size of the fulcrum and the amount of force you are willing to exert. A business has similar focal areas when considering change. These areas will certainly include, but may not be restricted to, issues such as the size and sentiment of the group affected by the change, the level of trust among the organisation's employees as well as the critical component of how radical the desired change will be. Yet it is clear that all of these issues should be identified early and their root causes clearly understood so that the design of the change process can incorporate how best to address and mitigate the issues related to the root causes. This will determine the ultimate success of the intervention.Unfortunately for management, a time will come when, even with the best change process and with the best will in the world, some employees will not be satisfied. Then the darker side of change rears its ugly head, so that management has to use its power to achieve the desired result. However, there should not be any long-term negative effects as long as this use of management's power is integrated into the change process. The high emotions that remuneration interventions generate have unfortunately made these interventions the focus of any staff dissatisfaction. As a result, our business is no longer simply about making changes to remuneration, but is more about adopting and developing market-leading processes for change management to get the eventual beneficial result of a change to a remuneration practice. The extensive experience we have gained through years of consulting, combined with our access to leading technical and legal resources, have enabled our consultants to provide remuneration and change interventions with unprecedented rates of success and sustainability. This certainly supports our contention that remuneration is all about influencing peoples’ perceptions.Marc de Chalain Director Cle Human Capital SA, Marc de Chalain is a Director of Clé Human Capital (Pty) Ltd, a firm of market-leading Reward, Compensation and Performance Management Consultants. Human Capital is a vital part to any business. Ensuring you have the right human resources, remuneration and reward strategies, performance management, or even payroll outsourcing can make a difference.Clé Human Capital helps companies to compete effectively for shrinking pools of talent by linking performance and reward strategies to our your overall organisational objectives. By working closely with your business, Clé Human Capital ensures the development of pragmatic and flexible solutions, tailored to satisfy your specific requirements. Recognised for innovative ideas, collaborative approaches and results-oriented implementations, Clé Human Capital’s remuneration and compensation consultants serve companies across diverse industries with excellent results.

About the author:
Marc de Chalain is a Director of Clé Human Capital (Pty) Ltd, a firm of market-leading Reward, Compensation and Performance Management Consultants.

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