Of stretch roles and designed to fail roles

Stretch roles are very popular these days as a development tool especially for high-potential employees. They provide an opportunity for accelerated learning. They can also lead to significant value creation that can benefit both the organization and the (credentials of the) employee.


So what is the problem? It is just that we often tend to be too ambitious when it comes to the degree of stretch in a stretch role. Hence we end up creating a 'designed to fail role' (with an impossible degree of stretch) instead of a stretch role. When we move a top talent into that role the result is often failure to meet the role expectations. If not handled properly, this can also end up as a 'career-limiting move' with the confidence and the credentials of the top talent getting adversely affected. So its is very important to differentiate between a 'stretch role' and a 'designed to fail' role and to get the degree of stretch in the role correct. Also there must be a clear exit plan (e.g. a defined timeframe in which the top talent would be moved out of the stretch role if it doesn't work out).


There is one important exception to this. It is possible that many of the employees who are classified as 'top talent'  haven't really experienced failure in their life & careers (or have become experts in sidestepping failure). This can limit their capability for 'double-loop learning' as they haven't yet been forced (by failure) to examine their underlying values, assumptions and mental models. In such a case a 'designed to fail' role might not be a bad idea so long as sufficient support systems (like coaching to help the employee to cope with and to enable double-loop learning from the failure) and safety nets (like protecting the performance bonus, salary increases and career advancement of the top talent to some extent) have been put in place to ensure that the failure is not catastrophic for either the organization or the individual. (See 'Of leaders and battle-scars' for an unorthodox perspective on leadership and failure)


So, what should be infer? Stretch roles are indeed valuable development tools if we design them correctly. We just need to be careful that in our enthusiasm to stretch the (high-potential) employee we don't end up putting them in career-limiting roles!

A Perfect Set of Delusions in Talent Management!

Talent Management is a domain that is becoming increasingly maddening for HR professionals and Business Leaders. The career paths that we create for employees with so much love and effort become are seldom followed (See Career planning and the myth of Sisyphus). Skillsets and roles that we have invested so heavily in become redundant. Increasingly fewer number of employees look at their current organization as a career destination (See Crazy HR for crazy times). Frequent changes in strategy, reorganizations and rapid scaling up & downsizing in workforce are making talent management resemble the game of ‘Calvinball’ where you make the rules up as you go along!

When the reality doesn’t suit us we are tempted to use the bricks of delusions to create a world that affirms what we would like to believe (See HR professionals and Multiple Personality Disorder and Of Reasons, Rationalizations & Collective Delusions for more). In this post let's look at some of the fundamental delusions (assumptions) in talent management practice and also explore some of the possibilities to overcome those delusions.


Delusion 1: Talent can be managed

Most of our talent management practices indicate the underlying assumption that talent can be managed in the same manner as any other resource. The problem is that talent comes with problematic parts like head and heart (and probably, soul) in addition to hands and legs. Also, talent, at least good talent, manages the organization as much as the organization manages the talent. It is a curious feature of human nature that we are more keen to manage than to be managed. Thus, the traditional ‘plan – implement – review - control’ approach to management doesn’t work very well when it comes to talent management (See 'The power of carrot and stick' for a related discussion).
A more appropriate approach to management would be ‘understand-predict-engage-facilitate’ when it comes to talent management. This requires developing deeper understanding of the human nature and human behavior in the workplace context, of the evolving employee preferences and of the enabling structures and choice architectures that can ‘attract’ employee behavior to desirable patterns. This would help talent mangers designing initiatives like ‘mass career customization’ that enable talent to manage themselves facilitated by a clearly defined set of options and implications of those options.

Delusion 2: Talent management is an annual event


In many organizations, talent management is an annual ritual that focuses on creating career & development plans for the employees and succession plans for critical positions. After this we go through the rest of year believing that our work or at least most of it has been done. The trouble here is that these plans crash-land into everyday business reality with very limited survival rate.  

In a rapidly changing business and people context, the progress against these plans should be monitored periodically and changes to the plans should be made where required. The best practice is to have at least one formal review every quarter. This need not be an elaborate and time-consuming affair. All that is required is to do a quick check on two things: whether the action points (role changes, development actions etc.) that were scheduled for the intervening period are on track and whether there are any significant changes to the business or people.


Delusion 3: Talent management can be done in a standalone manner

Often, we tend to look at talent management as a standalone HR process. There are two basic problems with this. First, talent management is not an HR only process. Second, talent management can’t exist in a vacuum.
To be effective, talent management has to be integrated with the business planning and workforce planning processes, with the talent implications of the business strategy being the starting point for talent management. The best practice is to begin talent review meetings with a structured discussion on the immediate and long term talent implications of the business strategy and plan, the talent gaps and challenges based on the same and the talent action plan to remedy the gaps. All discussions about talent movements and talent development should be done keeping this as the base.  Another important aspect here is to closely integrate talent management to the Learning & Development and Performance Management processes.   

Delusion 4: Talent management is all about managing high-potentials 


In many organizations, almost the entire focus of talent management is on identifying and developing high-potential employees. It is true that high-potential employees can create a much higher business impact, as compared to average talent, especially when there in critical roles. However, we would be deluding ourselves if we think that the organization runs on only high-potentials.

High-potentials form only a small percentage of the overall employee population. Achieving adequate levels of validity and reliability for the high-potential identification process has been one of the perennial problems in talent management (See 'Paradox of potential assessment' and 'Using Assessment Centres for evaluating potential - A leap of faith?' for more details )and this makes an exclusive focus on those high-potentials a very risky approach. Yes, there would be some talent that needs to be managed out of the organization. For the all the other talent in the organization, talent management should offer a compelling value proposition. Yes, segmenting this population and customizing the value proposition for each of the segments is a best practice. One such segment, apart from high-potentials, that merit extra focus and investment is high-performers in critical roles.

Delusion 5: Talent can read the mind of the organization

It has often been observed that an employee realizes how valuable she was to the organization and what great plans the organization had prepared for her only after she submits his resignation. This brings us to our next delusion – that talent can read the mind of the organization, especially when it comes to good things(like being in the succession plan for a more senior role). Ironically, employees often have a more accurate idea on the possible risks for them in the organization than the possible opportunities for them in the organization!
The best practice here is not to communicate labels or titles, like high-potential or top talent, to the employees. It is to communicate how the organization looks at the employee at this point and the actions that the organization intends to take subject to the employee keeping his side of the bargain, like maintaining a certain performance level and consistently exhibiting a defined set of behaviors.  Of course, the organization should not make promises that it won’t be able to keep (See 'To name or not to name that is the question' for more details).

Delusion 6: On the job development would happen automatically 

This is a very convenient collective delusion for talent managers! The script is something like this: The organization adopts the best practices of the 70:20:10 approach to employee development which correctly assumes that less than 10% of the learning takes place through formal training ad that most of the learning takes place through on-the-job- experiences (70%) and through coaching and interactions (20%).  This finding can be used as an excuse for 'cutting training budgets’ and for ‘absolving HR managers of their responsibility in talent development’ without establishing any concrete mechanism for facilitating the learning through job experiences and interactions'.

Unfortunately, learning through job experiences and interactions does not happen automatically as it requires deliberate planning, practice and facilitating in-depth reflection to derive learning from the experience. Thus there is a need to put in place a mechanism to structure, facilitate and track this type of learning. For example, 'the way a job is structured' is a critical factor in deriving learning through on-the-job experience. This calls for an intervention at the job design level to ensure that the jobs have sufficient responsibility, authority and scope. 'Job rotation' and 'special projects' also offer high learning potential. This would require that the organization puts in place policies that encourage job rotation and assigning people systematically to special projects. Experience maps can be designed to highlight the most important experiences to develop towards a particular role. Manager capability building is essential to enable them to help the employees to plan & execute the developmental experiences and to derive more learning from the experiences through coaching.


Delusion 7: Talent Management is only about long -term employees

Often, we assume that the talent management should focus only on those employees who are likely to stay on for a long time in the organization. This has become a delusion in an environment where the average tenure of the employees in a particular organization are reducing and when the employees who stay on for a long time are often not the best talent.
So what makes more sense is to assume that the organization would be handling only a limited (often very limited) part of the career in the case of most of the employees and to design talent management strategies & processes that would enable the employees to contribute within that limited time. Of course, making a focused attempt to increase the time that certain segments of the employees (e.g. high-potentials and high-performers in critical roles) spend in the organization is definitely worthwhile.

So why do we say that these seven are a perfect set of delusions? Let me just say that the number 7 is considered to be a perfect number in many cultures and some even associate mystical qualities to it. While this could also qualify as an assumption (delusion!), overcoming the seven delusions discussed above do give us a good starting point in taking a fresh look at what we do in the domain of talent management. While perfect solutions don’t exist, by being more aware of our delusions and the approaches to overcome them, we can definitely be more effective in our craft and also be saner and happier!

The Paradox of High Performance Cultures

'Creating a high-performance culture' is a phrase that adorns many a corporate presentation, made by both Business and HR Leaders. Once you have spoken about whatever else you wanted to say about your business strategy and plan adding this magic phrase, 'creating a high-performance culture', seem to give it a nice 'human touch' and demonstrates your commitment to facilitating the unfolding of human potential in your organization!

So, what is the problem? Just because something looks good on PowerPoint slides, we can’t assume that it won’t work in real life. The problem begins when we start asking questions. Is there really something like a high-performance culture? Does it remain constant across organizations? Is it a naturally occurring phenomenon or is it something that can be created? If it can be created, what kind of creation is required?  Once created, can it be sustained? It is when we try to answer these questions we come to the paradox mentioned in the title of this discussion.

An issue becomes a paradox when there are multiple opinions the issue, each of which appears to be true, but they seem to be in conflict with one another.  In this discussion, we will look at the various perspectives that exist regarding high-performance cultures and try to make some sense out of them.  Let’s start with some of the perspectives:

• High-performance culture is the ultimate source of competitive advantage and hence developing a high-performance culture should be given the highest priority
  High-performance culture is just a fad. It sounds good. But it is very difficult to bring it down to specifics and impossible to implement. It is just something that has been invented in retrospect to explain the success of some high-performing groups
  

• Culture is a characteristic of a group whereas high-performance is an outcome that depends on multiple factors. So it is misleading to speak about high-performance work cultures. One should instead speak about high-performance work systems
  

• There is no one culture that leads to high-performance
  

• There are cultural traits leading to high-performance that hold good across organizations
  

• We can define a target high-performance culture and create it in a short period of time
  

• Culture is something that evolves over a period of time and deepest levels of culture consist of unconscious assumptions. It is not something that be ‘copied and pasted’ on a group
  

To make sense out of this we need to clarify what is ‘culture’ and what is ‘high-performance’.  While there are multiple perspectives here also, let us use the following as working definitions. A group is said to be high-performing when it consistently achieves its goals. Culture is the ‘way we do things around here’ – the recurring patterns of behavior in a group. If we put these two definitions together, we can define a ‘high-performance culture’ as those recurring patterns of behavior in a group that enables the group to consistently achieve its goals. So, the real question becomes ‘is there really a set of such of behaviors that by itself lead to high performance of the group’?

 If we have to understand the functioning of groups, we have to look at both its hardware and software. Hardware is the structure, policies, processes etc. Software is the people and the culture. Often, problems at the hardware level get conveniently misdiagnosed as software problems, because it is much easier to train people and to run culture-building sessions as compared to making significant changes in structure, policies and processes. So, if we have to have a high performing group, both the hardware and the software have to be good and also in sync with each other.

 Most of the studies in the domain of high-performance cultures list a set of characteristics and factors associated with high-performance cultures. These characteristics and factors and their relative importance vary across the different studies, Yes, sometimes they do look like wish-lists and not like proven causal factors for high-performance cultures. Nevertheless, it is instructive to take a look at them.

Some of the popular characteristics listed are passion for excellence, shared understanding and buy-in to the organization purpose, vision and goals, outward focus, decisiveness, sense of urgency, speed and agility, sense of ownership and personal accountability on the part of all the employees, discipline, diversity and inclusion, innovation and risk taking, passion for learning and renewal etc. All these do seem reasonable. What is not proved is whether these characteristics are causally linked to high-performance or if they are just correlated with some of the high-performance situations.

Now let us look at the factors that the studies on high-performance culture list as the ones responsible for high-performance. They include high performance standards and benchmarks, alignment of goals, high person-job fit, clarity of individual performance goals coupled with real-time feedback, review and coaching mechanisms, streamlined, and simplified processes and procedures, policies that enable and not hinder performance, flatter organization structures, realigned competency frameworks and incentive schemes to reinforce appropriate behaviors, high degree of performance based differentiation in rewards, role modeling by the leaders etc. Here again all these factors seem reasonable. But, they seem to be part of any good performance management system and not something unique to high-performance cultures.

May be, that exactly is the crux of the issue. If these factors corresponding to good performance management are coherently and consistently implemented, it will lead to high-performance. That is, when these gets consistently done and get role modeled by the leaders, it becomes ‘the way things get done’ and that is exactly the definition of culture that we have been using! When these are also structurally reinforced by appropriate structures, processes and policies they become sustainable. This helps us to realize the true power and importance of performance management. The performance management system, when properly designed and implemented, can be the most effective culture building tool instead of being a collection of annoying forms and formats!

Yes, spelling out what exactly is high performance and what exactly is the target culture required in their particular context would be helpful for a group to work towards high performance. High-performance need not necessarily be relative. It is with respect to whatever goals a group sets for itself though the group might refer to external performance benchmarks before arriving at the its goals. Similarly, there is no one right blueprint for culture as the culture that will lead to high-performance for a group will depend on the group’s strategy, context and stage of evolution.

The most important thing here is to go beyond broad statements of intent and empty platitudes. To make things we work, we have to identify the few most important cultural characteristics that needs to be changed and reinforced. We also need to keep in mind the interrelationships, structural reinforcements and alignments. We must ensure that the new cultural characteristics that we are trying to build is in alignment with the core values of the organization. Another important enabler is to remove impediments to high performance like ‘passive resistance’. All these, when done consistently, becomes the way of life and hence fit to be called ‘culture’!

So where does this leave us? Yes, groups vary in terms of performance levels and some of that variations in performance can be attributed to differences in the patterns of behavior (culture) in the group. Since these groups function in different contexts and with different goals, we can’t identify a single blueprint for high-performance culture that will be valid across groups though there could be some common characteristics and factors. Yes, in any group we can examine the hardware and software of the group to see if they are optimized and aligned for the achievement of the goals that the group has set for itself. When we detect gaps in the same, steps can be taken to address the same. However, these will often require fundamental changes in the functioning of the group and that requires commitment and investment from the leaders for an extended period of time. We must remember that what often differentiates a high-performance culture is the intensity and rigor of the implementation and not content of the culture! Unless the group is fully committed to the change, in both letter and spirit, the changes can’t be implemented and sustained. After all, a culture becomes real only when it is experienced!

The OD Quest: Part 5 – Face to face with the antithesis?!

 "I don’t have an opening in my OD team now. But, you can join our recruitment team and do recruitment in the OD way”, I heard the Senior HR Leader telling a candidate who was hell-bent on joining the OD team. This was my fifth ‘encounter’ with this gentleman (See 'Passion for work and anasakti ‘, 'Appropriate metaphors for organizational commitment ‘ ,‘To name or not to name, that is the question’ and ‘A Mathematical approach to HR’ for the outcomes of my previous interactions with him).

I was a bit taken aback by what I just heard. I knew that often these kind of ‘solutions’ will end in tears or worse. However, similar to what had happened during my previous encounters with him, this interaction forced me to think a bit more deeply about the underlying issue - the application of OD(Organization Development) to the various functional areas in HR (Human Resource Management). That, in turn, has prompted me to write this series of posts on 'The OD Quest' where we will look at the possibilities  that arise when OD ventures into other parts of the people management terrain.

In the first post in this series (see The OD Quest: Part 1- Mapping the terrain) we did a cartography of the Human Resources (HR) and Organization Development (OD) domains to map out the current world (the terrain) inhabited by HR and OD and also the evolving worldviews in HR and OD (ways of looking at the terrain). In the second post (see The OD Quest Part 2 : Doing Recruitment in the OD way) we made a visit to the land of Recruitment and explored the value OD can add to Recruitment. In the third post (see The OD Quest: Part 3 – Rendezvous with L&D) we covered the Rendezvous with L&D. In the fourth post we saw how OD can sweeten Rewards and make it ‘Total Rewards’ (see The OD Quest: Part 4 – Totally Rewarding) In this post, let’s take our OD Quest to a domain that has often been considered as the antithesis of OD – Industrial Relations (IR).

Prima facie, OD and IR make strange bedfellows. Isn’t IR  the rough and tough side of HR whereas OD is the gentle and soft side of HR? Doesn’t IR happen in the context of an essentially adversarial relationship whereas OD assumes a win-win relationship. Isn’t IR about tangibles (like wages and working conditions) whereas OD is about the intangibles (like culture and values). Isn’t IR the bread and butter stuff for HR while OD is more like the icing on the cake? Have you ever come across an HR professional who is an expert in both IR & OD? Doesn’t IR happen in reality of the shop floor whereas OD interventions typically happen off-site locations that are as far away from the work reality as possible? Aren’t OD and IR two fields of study that are customarily separated in both theory and practice?


To me, these questions are based on the stereotypes of IR and OD and are not based on reality (See Decoding the ‘IR mindset’ and ‘Organization Development Managers as Court Jesters’  for more details). Yes, these stereotypes have existed for such a long time that they have become some sort of a self-fulfilling prophecy. After all (organization) reality is socially constructed to a large extent. But if we go beyond the outward appearances, significant possibilities for value addition begin to emerge. Yes, in aspects like creating a congenial 'organization climate' (the perception and attitudes of organizational members toward the organization that influence their behavior in the organization), the convergence between OD and IR are apparent whereas in other aspects we need look more carefully to see the convergence.

Let’s start with the most typical (stereotypical?) part of IR – collective bargaining leading to long-term settlements(LTS). There are often significant disruptions (at least distractions) to work before the LTS is signed.  Also the productivity improvement clauses in LTS are often notoriously difficult to implement. All these can be avoided if the process of working towards, signing and implementing the LTS is carried out as an integrated change management activity. Change management is the core skillset in OD and hence OD can be of immense value this case.

Another important area where OD can contribute to IR is Workers’ Participation in Management(WPM). Most of the WPM efforts remain ineffective or superficial as insufficient attention is given to the key enablers like working on the underlying assumptions and attitudes (of workers and management towards each other), building communication, trust and collaboration etc. OD can be of immense help in working on these enablers and hence can enable real and effective participation(WPM).  

Similarly OD can be of help when implementing any sort of changes in the workplace (e.g. changes in production processes, introduction of new equipment & technology, multiskilling etc.). OD’s behavioral science foundation supports values of human potential, participation, and development in addition to performance and competitive advantage. OD can also help in promoting attitudes and behaviours that enhance quality and industrial safety apart from creating better focus aspects like organizational justice (distributive, procedural & interactive justice) and inclusion & inclusive development. 

Yes, there is often some inherent conflict in the union management relationship. However, conflicts exists between various group of employees also (e.g. between various functions). So the more effective way is to recognize the conflict and work on it and that is an area where OD can definitely help (See ‘A political paradox for HR and OD’ for a more detailed discussion).

IR and OD have common theoretical roots in the domain of industrial sociology that examines the direction and implications of trends in technological change, globalization, labor markets, work organization, managerial practices and workplace relations. Over the years behavioral scientists have deepened the understanding of the ways that interpersonal, structural, and technological forces can affect organizations and industrial relations. Increasing diversity in both the characteristics of the labor force and the organization of work have blurred the distinctions between blue collar jobs (traditional domain of IR) and white collar jobs (traditional domain of OD). In general, workers with good education and high occupational status are more likely to assert their interests individually rather than through collective bargaining.

All industrial relations systems ultimately face the same fundamental issues : they must devise policies and institutions that can meet workers’ expectations and enhance productivity; they must also provide employees with a means of expressing their needs at the workplace while offering steps for resolving the conflicts that inevitably arise between workers and employers. The common need to ensure the survival of the organization in a highly competitive market place is putting increasing pressure on unions and management to jointly solve complex problems and hence the ratio of ‘integrative bargaining (win-win)’ to ‘distributive bargaining (win-lose)’ is increasing when it comes to collective bargaining. OD is essentially about facilitating joint exploration and problem solving

It is interesting to note that there are fundamental similarities between OD and IR in terms of the 'unit of work'. While most of the HR processes (e.g. recruitment, performance management, career development etc.) impact the employees primarily as individuals both OD and IR deal mostly with groups. Understanding of the formation and evolution of groups and group dynamics is key to both IR and OD. By the way, OD is not only useful for the ‘management team’ of the  but also for the unions. After all union is essentially a group of people who have to work together. It can be argued that the need for group cohesion is the highest for the unions as their power (or even existence) comes from being able to act together as a group.

Where does this leave us? IR is not the antithesis of OD. IR is essentially about balancing (in the dynamic sense) the economic efficiency of organizations with equity, justice and the development of the individual to find ways of avoiding, minimizing and resolving disputes and conflict and to promote harmonious relations between and among the parties involved. OD can definitely add value to IR – especially in terms of change management, facilitating greater alignment with the vision, mission and values of the organization, enhancing communication, collaboration, psychological commitment & trust and better sensing & management of the group dynamics.

OD can enable IR (Industrial Relations) to transition to Employee Relations (which goes beyond the collective bargaining level to include non-union organizations also where dialogue might be between employers and their employees, although with alternative bargaining structures) and then to Employment Relations (that looks more broadly at employment and the forces that impact employment to enable greater cooperation between management and employee to add value to the organization). Yes, for this his to happen HR professionals need to go beyond the stereotypes about IR and OD and look at the core of the domains. Yes, it also means that OD and IR professionals have to spend more time working together! We must also remember that even in those situations where there is really a ‘thesis’ and an ‘antithesis’, we can find often find a ‘synthesis’ that integrates the thesis and antithesis at a higher level!

Any comments/thoughts before we take our OD quest to the next domain in the HR land?!

The OD Quest: Part 4 – Totally Rewarding!

"I don’t have an opening in my OD team now. But, you can join our recruitment team and do recruitment in the OD way”, I heard the Senior HR Leader telling a candidate who was hell-bent on joining the OD team. This was my fifth ‘encounter’ with this gentleman (See 'Passion for work and anasakti ‘, 'Appropriate metaphors for organizational commitment ‘ ,‘To name or not to name, that is the question’ and ‘A Mathematical approach to HR’ for the outcomes of my previous interactions with him).

I was a bit taken aback by what I just heard. I knew that often these kind of ‘solutions’ will end in tears or worse. However, similar to what had happened during my previous encounters with him, this interaction forced me to think a bit more deeply about the underlying issue - the application of OD(Organization Development) to the various functional areas in HR (Human Resource Management). That, in turn, has prompted me to write this series of posts on 'The OD Quest' where we will look at the possibilities  that arise when OD ventures into other parts of the people management terrain.

In the first post in this series (see The OD Quest: Part 1- Mapping the terrain) we did a cartography of the Human Resources (HR) and Organization Development (OD) domains to map out the current world (the terrain) inhabited by HR and OD and also the evolving worldviews in HR and OD (ways of looking at the terrain). In the second post (see The OD Quest Part 2 : Doing Recruitment in the OD way) we made a visit to the land of Recruitment and explored the value OD can add to Recruitment. In the third post (see The OD Quest: Part 3 – Rendezvous with L&D) we covered the Rendezvous with L&D. In this post, let’s take our OD Quest to the land of Rewards that is also known by names like ‘Compensation & Benefits’ (C& B) and by more interesting ones like ‘Monies & Goodies’.

If we look at Rewards essentially in terms of compensation surveys, compensation structures and benefits the possible value addition from OD is not apparent with exception of facilitating deeper discussions around the compensation philosophy (the ‘why’ of what we do in Compensation &a Benefits and its alignment with the company values). However, when we look at Rewards as a tool to drive appropriate employee behaviors to achieve a particular set of business results, the possible value addition from OD  becomes clearer.  

Employee behaviors (and also employee engagement and performance) are driven by the ‘total employee deal’ offered by the company that include (in addition to compensation and benefits) factors like the organization culture, work environment, development & growth, meaning & purpose etc. OD plays a key role in enhancing these aspects. Most importantly, the underlying messages conveyed by the Compensation & Benefits provided by the company must be in sync with the messages conveyed by the other parts of the total employee deal. For example if an organization wants to provide a highly collaborative environment the Reward system should also support that. 

One of the ways to enhance the alignment between Rewards and OD is to jointly create a coherent and internally consistent ‘Employee Value Proposition’ or a ‘Total Rewards Statement’ that include all these dimensions. This would ensure better integration between the transactional aspects (traditionally the domain of Compensation & Benefits) and the relational aspects (traditionally the domain of OD) of the total employee deal. Please see ‘Of Rewards, OD and Passing the buck’ for more details. For example, it creates cognitive dissonance when the organization looks at salary purely as a 'matter of supply & demand' and at the same time wants the employees to develop a deep emotional connect with the organization beyond the rational connect  (or even consider the organization as their extended family).


Reward systems must focus on what is valued in the organization (stated values of the organization). Clarifying these values is an area where OD can help. There must be a clear connection between the valued behaviors and the Rewards. Money speaks louder than words! So if there is a disconnect between the espoused values of the organization and what is actually rewarded, the employee behaviors would be influenced by what is rewarded. It is also a sure way to lose credibility and trust.

Another very important contribution that OD can make is to better manage the formation and evolution of the psychological contract. While salaries are more in the domain of the employment contract, the way salary negotiations are conducted during the various phases of the employee life cycle can have a huge impact on the formation and evolution of the psychological contract and hence outcomes like employee engagement, performance and retention. Please see ‘Of Salary negotiations and Psychological contract’ for more details. Also, how Reward decisions are handled (especially when the organization is not doing well or when the organization can afford to drive a hard bargain with the employees) with both shape and reveal the organization culture and values.


OD can help in facilitating better change management around the changes made to compensation and benefits (especially on tricky ones like discontinuing a benefit or redesigning incentive/variable salary schemes to derive more value). Of course, it works the other way around also. When OD is driving an organization-wide change management effort, Rewards can be of immense help by rewarding the desired (new) behaviors/ways of working and hence facilitating them to take root. For example, if the organization wants to build a more performance-driven culture, increasing the level of differentiation in Rewards for the various levels of performance can be a key enabler.


So where does this leave us? OD can add a lot of value to Rewards. OD can help Rewards to evolve from Compensation & Benefits to Total Rewards! We can say that the application of OD makes Rewards better just like ‘sugar sweetens milk’ in the famous story* about Parsis. Of course, it is important to keep working on the Rewards & OD partnership to take it to higher levels of excellence and to ensure that things doesn’t fall through the cracks (or fall in ‘no man’s land’). Considering that we are on an OD quest and not a conquest continuous exploration of the possibilities of the Rewards and OD partnership definitely fits into the spirit of the OD quest!

 The story goes something like this.: Parsis came to India fleeing from persecution in their Motherland Iran and landed in Gujarat. There they approached the local king Jadi Rana and requested asylum. Jadi Rana motioned to a vessel of milk filled to the very brim to signify that his kingdom was already full and could not accept refugees. In response, one of the Parsi priests added a pinch of sugar to the milk, thus indicating that they would not bring the vessel to overflowing and indeed make the lives of the citizens sweeter. Jadi Rana gave shelter to the emigrants and permitted them to practice their religion and traditions freely. Parsis are still adding “sugar” to our lives!

Any comments/thoughts before we take our OD quest to the next domain in the HR land?!