Here’s the problem I have with compensation systems at many organizations today. They are either completely arbitrary, or they’re linked only to outcomes.
Corporate culture is about people’s behaviours – how employees accomplish goals, not just what they accomplish – so to establish a culture that drives company success, organizations ought to link a significant component of their compensation systems to behaviours. Some of Canada’s most innovative and successful companies have figured out that doing so is an obvious and important tool in aligning culture.
The perfect case study on the use of compensation as an alignment tool is WestJet. Back in the mid-1990s, when Clive Beddoe and his partners were creating the airline, they looked to Southwest Airlines for inspiration. Beyond its cost structure, which couldn’t be replicated in Canada thanks to our very different regulatory environments, Southwest’s competitive advantage was its culture, and the tools it used to align the interests of the employees of those with the company.
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