The Role of Pay

in
Organizational Change
Submitted by:
Jijo George Joseph 131127
Shobhana Jha - 131164

Why talk about Compensation in Organizational Change?

Creating effective, lasting change is very tough

COMPENSATION: frequently misunderstood and ignored step in change

management

Compensation and organizational change are interdependent

Pay supports change but cannot drive change

Understanding the broader transformation process

Linkage between compensation and work culture

People

Work

Performance

5 Steps to a Successful Future

1.

Assess the organization

2.

Design improvements
environments

3.

Develop details of new work and roles and an

implementation plan

4.

Implement the new processes

5.

Evaluate and improve the processes

to

work

processes

and

1. ASSESSMENT: Reaching Beyond the Low-Hanging Fruit

Important to understand the reason for change, the extent of change and the expected
process of change

Synchronisation between organizational goals and processes

Executives need to sit and understand each others reasons for introducing change THE
VISIONING PROCESS

The role of the CEO is very important his/her presence exceedingly necessary

Consensus required for: need for change, outcome of change

Communication about change: direct, open, timely, continuous

Pay strategy can be used to communicate intent for new behaviours and new outcomes
more effectively than forms of regular communication

1. ASSESSMENT: Reaching Beyond the Low-Hanging Fruit

Measure of time and resources: frequently underestimated

Need for training to employees

Simultaneously, give 100% to the regular job

Business cannot be stopped to initiate change

Mission/Vision: can act as tools to focus employees on the future, but should not
become an inflexible overambitious instrument

Balancing Empowerment:

Know when to lead

Know when to delegate

Balancing both

2. DESIGN: Building the Cultural Infrastructure

Designing the framework and infrastructure to carry the new vision and culture forward

Compensation strategy aspects to be examined relative to their expected contributions

1)

Emergence of critical work roles

2)

Requirement of new behaviour and its subsequent encouragement

3)

Interaction between the different work roles

4)

Reward mechanisms to foster desired behaviour leading to optimal organizational

performance

This step is usually undertaken by middle management which may lead to insecurity and
backlash

Hence, senior management must work closely with the middle management for complete
buy-in

3. DEVELOPING the Details of Change

Focus to shift from macro perspective to micro perspective

Change elements to be examined in detail

Create developmental CFTs of managers and employees for easy

buy-in

Caution against rushing through the process - define a reasonable

timeline keeping in mind that this step may be long-drawn

4. IMPLEMENTATION: Timing is everything

Timing is introducing change is very critical

Premature introduction of compensation

change leads to an entitlement orientation

Late introduction leads to loss of credibility

and linkage to other initiatives

Optimal Time for introducing compensation

change: 12 18 months into the
implementation of the change initiative

Organization may also go through one cycle of

PMS before implementation

5. EVALUATING & RE-DEFINING

Evaluation : A process that should never stop

May be necessary to refine everything mission to work

processes

Organizations need to keep changing strategies every 4-5

years as the environment and context change.

Pay strategies and compensation have to change in tandem

with the organization

THANK YOU