Do You Have A "Plan" Or A "Strategy"?

Do you have a compensation plan or a compensation strategy? The same question is equally important for employee recognition and rewards – do you have a plan or a strategy? On a broader level – how would you answer that question in regards to Total Rewards in your organization?

What's the difference between a plan and a strategy? A Strategy + Business article on an executive definition of strategy sparked this question for me:

So, what is a business strategy? Strategy is different from vision, mission, goals, priorities, and plans. It is the result of choices executives make, on where to play and how to win, to maximize long-term value.

"Where to play" specifies the target market in terms of the customers and the needs to be served. The best way to define a target market is highly situational. It can be defined in any number of ways, such as by where the target customers are (for example, in certain parts of the world or in particular parts of town), how they buy (perhaps through specific channels), who they are (their particular demographics and other innate characteristics), when they buy (for example, on particular occasions), what they buy (for instance, are they price buyers or service hounds?), or for whom they buy (themselves, friends, family, their company, or their customers).

From an HR leader perspective, that translates to:

• Where are the target customers? In organizations with more than one office, employees outside of Headquarters often feel like secondary citizens. This is especially true on a global scale. HR Pros must always consider all employees – everywhere in the world – to be critical "customers" and worthy of the same investment of time and attention. And this principle applies across job types as well. Too often, some employees in certain job functions are thought to not contribute to strategic objectives. I argue strongly against this. After all, if it were true, why are you paying them?
• Who are they? Obviously, the employees are in terms of fair pay, a comprehensive and competitive benefits package, recognition and rewards that motivate, and so much more. But the "business" itself is also a target customers in that HR Pros are constantly balancing on the fine line of what's needed to secure and retain the best talent in the industry while never forgetting the bottom-line.
• How they buy? Humans are fickle beings, as any HR Pro can attest. The annual rite of passage – benefits selection – is an excellent example. Understanding how your unique employee demographic mix looks at benefits, their personal needs, and how you can accommodate and – critically – communicate to them so they "buy" appropriately is another delicate balancing act.
• What they buy? What is it your employees choose to engage in? Do you offer an employee recognition program but struggle to increase adoption and usage of it? Do they simply refuse to invest as they should in your 401K package (at least to get the "free money" through the company match)? Understanding the underlying reasons (sometimes cultural, sometimes as a result of history with the organization or personal history), makes it easier to help employees "buy" appropriately.

The Strategy + Business article concludes:

In the end, to define the fundamentals of your business strategy, you need only to answer three questions:

1. Who is the target customer?
2. What is the value proposition to that customer?
3. What are the essential capabilities needed to deliver that value proposition?

Without clear and coherent answers to these three questions, you may have an exciting vision, a compelling mission, clear goals, and an ambitious strategic plan with many actions under way, but you won't have a strategy.

That's an interesting proposition for HR Pros in the context of the discussion above. How would you answer these three questions regarding your compensation (or recognition and rewards, or Total Rewards) initiatives? Do you have a plan or a strategy?

As Globoforce's Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston.

Thanks to Derek Irvine / Compensation Café
http://www.compensationcafe.com/2012/03/do-you-have-a-plan-or-a-strategy.html

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