PLAN DESIGN Compensation

Pay and Personality

Ted Turnasella Principal Comp-unications

Plan design improves when employees personalities are factored into the equation.
compensation field must accept an uncomfortable fact about variable pay. While we emphasize the importance of reward programs for motivating high performance, factors beyond our control moderate the success of such interventions. These factors are the cognitive abilities and personality traits of employees.1 It is not unusual to hear compensation plan designers talk about employee populations that are risk averse or risk tolerant. Practitioners often consider such factors in shaping the pay plan design and preparing for its implementation. Generally, employees at the lower end of the pay scale are viewed as being risk averse because most of their income is used for lifes essentials. Putting any money at risk to achieve a higher level of earnings is perceived as threatening to such an employee population. Employees with significant amounts of discretionary income those in the higher pay scalesare considered to be more risk tolerant. They are more willing to put some pay at risk to achieve a higher level of compensation overall. Sometimes, the aversion to risk is associated with people in certain jobs. For example, sales representatives are often thought to be comfortable with taking risks, whereas engineers and scientists are usually viewed as more conservative in this regard. In any case, these observations, perceptions and assumptions simply do not go far enough. In a recent article, Ira Feder stated, One weakness of cash rewards is that they dont allow for the individual differences in the very diverse human beings that they intend to motivate.2 We know much more about human behavior than is evident in the one dimension of risk aversion. Many psychological models have been produced that, in general terms, portray human personality types and predict preferred behavior, attitudes and tendencies. Organizational devel-

hen it comes to compensation, many managers seem to subscribe to a vending machine view of people. They see the link between compensation and behavior from a simplistic and somewhat mechanical perspective. If you put 75 cents into a vending machine, out pops a soda. If management puts money into people, out will come some desired result. But the reality is different. People are much more complex than machines, and compensation plan design is often more art than science. Sound compensation plan design usually proceeds in three phases: discovery, design and implementation. During the discovery phase, information is collected and analyzed for use during the design phase. The design phase results in programs that attempt to link the companys pay philosophy and objectives with the pay level and earning opportunities provided to employees. During the implementation phase, the new pay plan policies and structures are overlaid on the existing population to determine any areas of adjustment that may be required. A communications plan is usually completed to outline the content and timing of messages that will be conveyed to employees and supervisors. When all of these phases are complete, managers may believe that the new pay plan can be launched. But can it? In fact, during the discovery, design and implementation phases, environmental factors are often overlooked. These environmental factors are the employees themselves, or to be more specific, their personalities. Theodore Weinberger stated it very well when he wrote, At the risk of political incorrectness, I believe those of us in the

2002 Sage Publications

MARCH/APRIL 2002

49

PLAN DESIGN Compensation

opment consultants who work with companies to improve team dynamics, coach and counsel executives to improve their performance and resolve interpersonal conflicts have long used such valuable tools as Myers-Briggs analysis. Yet, in the area of pay plan design, this insight into the personalities of pay plan participants goes largely unexplored and underused. Personality profiling can be of great value in two critical areas of compensation practice. First, personality profiling can act as one of many factors that shape the design of a compensation plan. In every compensation plan design, companies make critical decisions about the nature and amount of earning opportunities that the pay plan will provide and the performance criteria by which employees earn rewards. Understanding the personalities of the employees, for example, sales representatives or retail associates, for whom the plan is intended, can provide great insight into how the plan will be perceived and evaluated by the participants. Second, personality profiling can provide a much more effective basis for communicating the plan to its participants. Effective communication is, perhaps, the most important element in a successful compensation plan, perhaps even more important than the design itself. Welldesigned pay plans that are poorly communicated often fail because they are misunderstood. The purpose of this article is to explore how we can use and consider personality as a factor in pay plan design and communications. It deals with personality profiling in a very basic way. The actual application, interpretation and use of personality profiling is a complex subject and well beyond the scope of this article.

dislikes. This kind of information may be useful to compensation practitioners who are attempting to motivate effective employee behavior. To be useful, any model, including the DISC model, must be reliable and valid. It would be impossible to present a thorough survey of the research done on the subject of personality models within this article. However, Karen Roodt of the Technikon Natal in South Africa conducted one such research study of DISC, which demonstrated high reliability and validity.3

Description of Each Personality Dimension

As stated above, Marston believed that there are four factors that determine a persons personality and that serve to predict their behavior. The basic premise of his work is that people live and work in two different environmentsa hostile environment and a favorable environment. Every day, we face many situations involving one of these two environments. The choices that we make and

Effective communication is, perhaps, the most important element in a successful compensation plan, perhaps even more important than the design itself.
the actions that we take in dealing with each environment can be broken down into two separate rolesan active role or a passive role. The four personality types shaped by these factors are described below. Dominant (D). People who prefer to take active roles in hostile environments are defined as having dominant personalities. They are unafraid of taking risks and enjoy facing challenges. Dominant personalities initiate action, especially when things are not going well. Their communication style is direct and, at times, blunt to the point of being rude. They drive hard to obtain results and are not deterred by temporary

Personality Profiling
There are many personality models, and each model uses various intersecting personality dimensions to define a persons personality. Many of these models, such as Myers-Briggs, are based on the work of Carl Jung. In the early 1920s, Dr. William Marston developed a personality model, referred to as DISC, that intended to explain peoples emotional responses. To test his theories, he developed a test to define and measure four dimensions of human personality: dominance, influence, steadiness and compliance. In a true DISC analysis, not only is each of these dimensions analyzed, but also the relationship between the factors is analyzed. Such an analysis can be used to describe a persons motivations, likes and

50

COMPENSATION & BENEFITS REVIEW

PLAN DESIGN Compensation

setbacks. People with dominant personalities can become bored if their environment does not change. They love variety and crave adventure. They view the status quo as a point of departure, not as a comfortable place to be. Finally, they are demanding of themselves and others. Influential (I). People who prefer to take active roles only in favorable environments are described as having influential personalities. Such people enjoy persuading others and view such accomplishments as evidence of being well liked. People who demonstrate influential personalities prefer to deal with others in a one-to-one relationship where they have greater control of the interaction. Mostly, they enjoy being around people, and they seek acceptance and prestige in the eyes of others. They are willing to trust others readily to form lasting relationships. They are optimists and will sometimes avoid having to look at the negative side of an issue or decision. Their need for acceptance is demonstrated in their need to dress fashionably and impress others with their network of friends and professional affiliations. Supportive or steady (S). Some people prefer to act within favorable environments by taking a passive role. Their personality is characterized as being supportive or steady. They are not afraid of dealing with life and its changes, but they do not seek out challenges and would prefer not to make waves. They are patient and willing to work at a steady pace to achieve their goals. They like the status quo and need to be prepared in advance for any changes in their environment. They want others to appreciate them for what they accomplish, and they dislike deadline situations and pressure because such factors can compromise quality. Compliant and conscientious (C). The last of the four personality types is characterized by a compulsion to be compliant and conscientious and to avoid trouble at all costs. These are the people who take a passive role in the face of a hostile environment. Such people may lack confidence. They find security only in order and in rules and concepts that do not change arbitrarily or without warning. They can get lost in the details of work without ever seeing the bigger picture. Avoiding trouble at all costs is a principle they live by. A person with this personality type is cautious and will not take chances or make risky decisions easily. They need personal attention and will often try to be what they believe others want them to be.

In reality, most of us combine elements of each of these four personality types in our daily lives. Generally, however, only one of the types will stand out and will come to represent our dominant personality characteristic. It is possible, using personality profile testing methods, to determine a persons dominant personality and, thereby gain insight into that persons receptivity to and comfort with different types of earning opportunities offered within pay plans.

Pay Plan Design Dimensions

A total compensation plan accomplishes two basic objectives. First, it provides the conceptual framework for establishing compensation levels for jobs, usually based on job content. Second, a compensation plan provides earning opportunities to employees as either adjustments to base pay or payments in cash or some equivalent. Ideally, the earning opportunities provided are linked to results or behaviors that are of value to the organization. In this discussion of pay and personality, the focus is not on the processes involved in establishing pay levels. These processes usually rely on market studies and job evaluation methods administered by the organization. Employees usually have little knowledge of such methods. Instead, the focus is on the design and communication of opportunities to earn additional income. By offering such earning opportunities, organizations attempt to influence employee behavior, for example, to motivate increased selling effort, focus attention on quality or improve customer service. The factors involved in designing earning opportunities include the following: 1. Performance criteria. The link between an earning opportunity for the employee and a benefit for the company is established in the performance criteria and goals that are embedded within the compensation plan. Excellent criteria are well defined and lend themselves easily to credible tracking and evaluation. They define success for the company. Compensation plan participants will understand and agree with the criteria in place. They will believe that selected criteria are directly linked to the companys success and that they can be accurately measured or evaluated. Such criteria are usually referred to as objective criteria. At times, companies will use criteria that cannot be measured objectively but, rather, must be evaluated based on available

MARCH/APRIL 2002

51

PLAN DESIGN Compensation

records, management observation and other related information. For purposes of designing earning opportunities, evaluative or subjective criteria often do not serve as well as more objective performance criteria because the link between effort and reward is more tenuous. 2. Performance goals. A goal is the quantitative expression of the desired achievement for particular performance criteria. To be effective as elements in a compensation plan offering an earning opportunity, the goal needs to be challenging but not impossible to reach. Often, plan participants will have some role to play in the goal-setting process itself. Such activity heightens the willingness of plan participants to accept the goals as fair. 3. Performance assessment basis. The organization level at which performance is measured through the criteria and goals can have a profound impact on human interaction. Generally,

assessment basis. If the performance assessment basis generates the pool of money to be distributed to plan participants, it is the reward distribution basis that determines who gets what. For example, suppose the basis for performance assessment is pretax profit for the division. The plan describes that if pretax profit is at least 10%, then a bonus pool of $100,000 will be created. The basis for distributing this pool (reward) might be a pro-rata share based on the individual employees salary or some other formula. 5. Influence over outcomes. The degree to which the employee can influence the results being measured or tracked is sometimes referred to as line of sight. Reasonable line of sight is an essential link in incentive plan design. If plan participants see themselves as having little influence over the performance criteria and goals embedded in the plan, then the incentive plan has little chance of driving performance. In essence, such a design could be thought of as a lottery, not a true incentive plan. 6. Type of reward. Rewards, or additional earnings that employees obtain under a pay plan, can be delivered in several forms. Some plans pay out cash in a lump sum. Pay-for-performance plans usually offer increases in base pay. Stock or other forms of equity-based instruments are often used, especially for executive compensation. Other compensation plans offer goods and services. Finally, there are psychic rewards, such as plaques, letters of congratulations or other positive acknowledgements that may have little economic value but provide personal satisfaction. Depending on their personality type, people will value rewards differently. 7. The amount of money at risk relative to total compensation. The mix of compensation within an incentive pay plan refers to the relationship of the amount of money at risk to the total compensation package being offered to the employee. Employees at lower compensation levels often have only a small portion of their total compensation at risk that is dependent on the attainment of a company, team or individual goal. Conversely, employees at the upper end of the economic spectrum, for example, executives, often have considerable amounts of money at risk in their compensation packages. 8. Frequency of payment. The frequency with which performance earnings are delivered is one of the critical elements of pay plan design. Greater frequency of payment will cause employees to

The organization level at which performance is measured through the criteria and goals can have a profound impact on human interaction.
criteria measured at the individual level will heighten any competitive propensities that the pay plan and human dynamics will permit. Plan designers need be vigilant to avoid situations that encourage competition, when cooperation is an essential ingredient in the organizations success. Criteria measured at the team, departmental or organization level will tend to encourage teamwork at these levels but may diminish individual motivation. It is the performance assessment basis that determines if an additional compensation will be distributed to employees and how much in total will be spent. In other words, it is the attainment of defined objectives that will trigger the establishment of the pool of money to be given to employees. 4. Reward distribution basis. The reward distribution basis is different from the performance

52

COMPENSATION & BENEFITS REVIEW

PLAN DESIGN Compensation

become more dependent on the reward program income but may result in lower amounts, which may have less motivational impact.

accomplishment. Employees with a dominant personality want control. They may not be good team players, and they will not want their incentive rewards to depend on the actions of others. Reward distribution basis. As with the basis for evaluating results, employees with a dominant personality will want to receive a reward based on their individual efforts. In other words, even if the determination for paying an incentive is based on team or company performance, the high-D personality will want to be recognized and rewarded individually. The compensation design for a team-based incentive plan that has high-D members will need to contain an individual recognition and reward mechanism. Influence over outcomes. Without such influence, high-D people will resent the lack of control and will focus their attention elsewhere. Type of reward. Earning opportunities for people with dominant personalities generally should be in cash and should be unlimited. Capped incentive earnings will diminish the competitive spirit of the high-D personalities and disappoint them. If the compensation plan does not provide any other challenges, they may look elsewhere to feed their need for competition. High-D people value recognition when they have accomplished challenging goals. Expense accounts, with not too much red tape, may be valued by high-D people who want to be seen as successful and prosperous. The amount of money at risk relative to total compensation. Dominant personalities enjoy risk provided they have control over the outcomes. Compensation plan designers can, if the situation warrants, build considerable pay-at-risk for high-D people. The amount of rewards based on performance should also vary widely. In other words, the level at which any reward is earned should be fairly high. The amount of reward for exceptional performance should also be high. The principle at work in such a design is greater risk, greater reward. High-D people should not receive rewards for lackluster performance. Frequency of payment. Highly dominant people are challenge focused but not very patient. They want recognition for a job well done. A successful incentive compensation plan will provide earning opportunities for short-term as well as long-term goals, if possible. Pay plan communication. Communication of earning opportunities to people with high-D

Plan Design for Different Personalities

1. Dominant Personality
Performance criteria. People with highly dominant personalities will not respond well to discretionary or evaluative performance criteria. They want control. They want to know what they have to do to obtain a meaningful reward. Any condition that suggests their hard efforts might go unrewarded or unnoticed will diminish their motivation. Because high-D people like and even need change, the performance criteria and goals for earning opportunities should be changed periodically to prevent the high-D personality from becoming bored and stale. When establishing performance criteria for high-D personalities, the designer must ensure that every criterion will have an offset. High-D people can become so focused on goal attainment that they will strive to reach goals under any circumstances and at any cost. Quality may be sacrificed for quantity goals. Profit may be sacrificed for revenue goals. Therefore, when establishing criteria for the high-D person, there must be negative consequences for any outcomes that will negatively effect the organization. To keep people with dominant personalities focused and motivated over the long run, performance criteria should be changed to reflect new business challenges. Performance goals. To fully engage a dominant personality to take advantage of an earnings opportunity, the employee should be given a chance to participate in and perhaps even negotiate performance goals. Establishing goals is ultimately managements prerogative, but shared goal setting can increase the level of high-D employee commitment and improve results. For high-D employees, the use of objective, formulabased performance criteria and goals will be most effective. The goals themselves should represent a true challenge; that is, they should be difficult, but not impossible, to achieve. Challenge motivates high-D employees as long as they have control over the outcomes. Performance assessment basis. Evaluating the performance of high-D employees ought to be based more on individual, not team, effort and

MARCH/APRIL 2002

53

PLAN DESIGN Compensation

personalities should stress the attainment of goals and the fact that the performance goals will not be easy to attain. Because highly dominant persons respond to change well and in fact require it to keep them focused, compensation plan communications should focus on changes and developments in the plan design or in the environment that will make the new compensation plan different from last years plan. Communications, verbal or written, should be direct and to the point. The link to the companys success should be simply stated without conditional phrases.

the high-I person, there must be negative consequences for any outcomes that will negatively affect the organization. Performance goals. People with influential personality types seek to influence others. In this regard, engaging the high-I personality in a discussion of the goals to be reached is essential to obtaining their buy in. The nature of the interaction should be somewhat democratic. That is, the manager should invite a free exchange of ideas and be prepared to discuss business objectives from a fairly broad perspective. The manager should listen carefully to what the high-I employee is saying and be prepared to change an opinion on a different point of view. Influential personality types are competitive; they will respond as well as high-D types to highly challenging goals but only if reaching the goals involves public recognition of their achievement. Therefore, rewards should be based on a range of goal achievement that begins at a moderate to high difficultly level. The upside potentialthat is, maximum earnings for exceptional performancemay also be more focused on psychic rewards than on cash as they are for the high-D. Performance assessment basis. Evaluating the performance of high-I employees ought to be based more on team or group, not individual, effort and accomplishments. Employees with an influential personality want to influence others and win their respect and admiration in accomplishing results. They do not seek individual control. Team or group goals also reinforce identification with the organization and allow the high-I person to interact with many other people through their team members. Performance assessment at the team level should focus on objective and measurable results. However, when assessing the performance of the high-I personality on an individual basis, an evaluative (subjective) method will be more appropriate because it provides management with a way to recognize the high-I employee for the intangible or social performance factors that the high-I person values. Reward distribution basis. As with the basis for evaluating results, employees with an influential personality will be comfortable with rewards that are distributed equally on a team basis. However, their need for praise and acceptance will require a display of recognition for their personal efforts. In other words, even if the determination for paying an incentive is based

2. Influential Personality
Performance criteria. People who fit the influential personally profile will be more comfortable with performance criteria that are based on social interaction, such as leading or being a member of a project team. This is not to say that they are uncomfortable with competition. High-I people can be competitive when striving for recognition and rewards. They will, however, be more tolerant of and comfortable with evaluative (discretionary) criteria and goals if they have had a chance to discuss these with their manager in a one-on-one exchange. The discussion need not evolve around negotiation of goals but should focus more on clarification of the employees role and the need for a person in that role to interact with others to be successful. Any criteria or goals that suggest isolation or that may cause negative reactions from subordinates or colleagues, for example, reduction of overtime hours, would be difficult for high-I people to deal with. It is social interaction and a feeling of being admired that motivate high-I employees. When establishing performance criteria for high-I personalities, the designer must ensure that the plan performance criteria be precisely stated and have internal structure, that is, deadlines and limits. However, high-I employees enjoy their freedom, so the structure should be built into the criteria, not imposed from an external source. In other words, the goal is to provide high-I people with structure while maintaining autonomy. Because influential personalities tend to lose themselves in social relationships, they may lose sight of the business purposes that the compensation plan is encouraging them to focus on. Quantity may be sacrificed for quality goals. Ensuring that people feel good about their work may replace the need for results. As with the high-D personality, when establishing criteria for

54

COMPENSATION & BENEFITS REVIEW

PLAN DESIGN Compensation

on team or company performance, the high-I personality will want to be recognized individually. The high-I personality will compete as aggressively as the high-D personality but more for recognition. Influence over outcomes. Generally, employees want control over the results that will form the basis of a bonus payment or a raise in pay. This is true of the high-I personality as well, but not to the same extent as it would be for a high-D personality. Because high-I people tend to focus on personal relationships, they will not require the same degree of control over results, as do highD people. They will be more comfortable dealing with unstable performance factors, especially if they are working in a team situation, which would tend to create a shared fate attitude. Type of reward. Earning opportunities for people with influential personalities must include psychic rewards. Letters of commendation and public displays of recognition, for example, gifts or plaques, are important to high-I people and should be given liberally. However, this in not to suggest that such rewards be spurious or gratuitous. Any reward offered within the context of a compensation plan should be earned and based on real accomplishments. Expense accounts and club memberships would be highly valued by high-I personalities because these provide vehicles for increased social interaction. The amount of money at risk relative to total compensation. Influential personalities will be more willing to accept risk if the performance criteria and goals are team based. Compensation plan designers can, if the situation warrants, build moderately high pay-at-risk for influential personality types based on team goals. The amount of rewards based on performance should also vary accordingly. In other words, the level at which any reward is earned should be moderately high. The amount of reward for exceptional performance should be consistent with this approach. In any variable compensation plan, the principle at work is greater risk equals greater reward. Frequency of payment. Highly influential people are socially focused but not patient. They need frequent evidence of being accepted and valued. A successful variable compensation plan for high-I personalities will provide frequent opportunities to recognize the progress being made and any exceptional efforts made by team members. For high-I people, recognition might include such things as meetings with the CEO to

discuss accomplishments, milestone accomplishment parties or other social events. Pay plan communication. Communication of earning opportunities to people with high-I personalities should stress individual recognition and rewards and teamwork and cooperation needed for the company to reach its business objectives. People with influential personalities will more readily accept business objectives that are defined in general, personal terms with less emphasis on objective descriptors. Their response to personal explanations directly from senior management about the challenges the company is facing will be as strong, and perhaps stronger, than their response to any hard cold facts that are presented. In other words, high-I people will be motivated by the expressed personal commitment made by senior management. In addition, the communications should present a clear link from the companys business objectives to the role of the employees in achieving

People with high influential personalities want and need to be connected to the greater good and to feel that they are part of a productive society.
those objectives. People with high influential personalities want and need to be connected to the greater good and to feel that they are part of a productive society.

3. Supportive Personality
Performance criteria. A person with a highly supportive personality is not a good choice for variable pay plans because his or her preference is for stability and security. Dealing with the uncertainties and ambiguity of performance under a variable compensation plan is not something that will be easy for high-S people. However, in fashioning the performance criteria for high-S people, the compensation plan designer can improve this situation in the following ways.

MARCH/APRIL 2002

55

PLAN DESIGN Compensation

Performance criteria, namely, those factors that are to be evaluated to determine success under the compensation plan, will need to be well rooted in the history and experience of the company and completely understood by the employee as well. In other words, the performance criteria need to be based on extensive historical fact. Criteria based on new business initiatives that have no basis in past experience will be difficult for highly supportive people to buy into and will be viewed as a threat to their security. If possible, performance criteria should be objective and measurable, not discretionary or evaluative in nature. Objective criteria, when the rules are clearly stated, are much more reliable than evaluative goals. High-S people respond well to reliable situations. Performance goals. High-S personalities generally want to avoid change and pressure or at least minimize their effect on the peaceful, stable lives that they value. Setting goals for such people should address this need. If compensation plan goals are designed to contain a time limitation (i.e., a deadline), then these deadlines should be as generous as possible while still meeting the companys objectives. This holds true for other kinds of goals as well. Stretch goals that are highly motivating to high-D personalities will be disabling and distasteful to high-S personalities if they push the high-S beyond where he or she wishes to go. Therefore, the performance goals for high-S people should not involve significant change or tight deadlines and untried strategies. Goals set for performance criteria should, as was the case with the criteria themselves, be based on historical patterns or trends that are easy to identify and understand (e.g., number of returns for the last three years). Because high-S people do not adapt easily to change or pressure, their participation in setting goals should be done with care. They will need to be sold on the soundness of the performance criteria and the supporting historical data before they will commit to any level of challenging goals. After criteria are identified, the high-S person will need time to adjust to the change in his or her environment. Because they are not good negotiators, managers need to be careful that they do not talk high-S people into goals that they view as unattainable. Performance assessment basis. Highly supportive people will be comfortable having their performance based on either team or individual results. However, they may find more security

and stability in a team environment if the team members interact harmoniously and deal with predictable business outcomes. Discord within a team or team dynamics that are not predictable, for example, creative design teams, will be detrimental to the performance of a high-S person.

Highly supportive people will be comfortable having their performance based on either team or individual results.
High-S people should be placed on teams and have their performance against goal measured on a team basis if the role they will play in the tactical business plan requires supporting other team members. If not, assessment of their performance should be individually based. High-S people will need to have input into any changes being made the performance assessment factors. Reward distribution basis. Supportive people do not need as much individual recognition as do dominant or influential people. They will readily accept team-based rewards and share them equally with other team members, as long as they view the other team members in a positive light and the distribution as being fair. If they do not, they may resent the rewards given without actually expressing their displeasure and, in fact, may harbor negative feelings that will affect their future performance. If rewards are given to a high-S person on an individual basis, there should not be too much fanfare about it. High-S people are not necessarily comfortable being in the spotlight. Individual rewards to supportive people should focus on their length of service, steadiness and dependability. Because supportive people are possessive, they will appreciate rewards in the form of material things, for example, gifts that they can use. The amount of money at risk relative to total compensation. Supportive personalities are not usually risk takers, nor do they require high risk/reward compensation strategies to get them focused and motivated. With this in mind, compensation plan designers can structure the total target compensation (i.e., base pay and incentive

56

COMPENSATION & BENEFITS REVIEW

PLAN DESIGN Compensation

pay at goal) for supportive personalities at lower values than for dominant personalities. Supportive personalities will be more willing to accept risk if the performance criteria and goals are team based and well connected to historical precedent. Compensation plan designers can, if the situation warrants, build moderately low pay-at-risk for supportive personality types. As stated above, the amount of rewards based on performance should also vary accordingly. That is, the level at which any reward is earned should be moderately low, and the amount of reward for exceptional performance should also be moderately low. Type of reward. In addition to cash, rewards for people with supportive personalities should include longevity rewards, that is, rewards for excellence over long periods of time, as either cash or gifts. As stated above, any reward offered within the context of a compensation plan should be earned and based on real accomplishments. This is especially true for the high-S person. High-S personalities would value personal time off to spend with their families as a meaningful reward. Frequency of payment. Highly supportive people are patient. They enjoy working in environments that are stable and in which progress is steady. The frequency of incentive payments for supportive people can be long term, for example, annual. Although high-S people are patient and willing to wait for a reward, they still will require performance feedback on a regular basis and reassurance that goals and criteria have not changed. Pay plan communication. Communicating variable pay plans to people with highly supportive personalities should focus on the long-term relationship of the company with the employees. It should focus on company loyalty, teamwork and managements faith in the talent of its employees. Business goals and objectives should be explained, as much as possible, in evolutionary, not revolutionary, terms. If the pay plan involves optional rewards for employees, the number of options for high-S people should be limited. They should be presented as attainable through steady, hard work. Management should state its commitment to support the employees as much as possible. If the compensation plan is a new pay initiative, then the communication to high-S people should be planned well in advance. It needs to be thorough in its presentation of facts, the compa-

nys reasons for instituting the plan and how the plan will affect the employees.

4. Compliant Personality
Performance criteria. The compliant personality (high-C) is perhaps the worst possible candidate for a variable compensation plan because avoiding risk is their predominant character trait. They are skeptical people and will be less likely to be comfortable with unproven, variable pay plans. Although they may be willing to take limited, prudent risks, they need to know all of the details of exactly what will happen, when it will happen and to whom it will happen. The rules and conditions of the compensation plan must be explicit, clear and detailed. More than anything, high-C people seek to avoid situations of ambiguity and independent choice that could reflect negatively on them. They want to follow precise instructions that do not vary. They want to know all the details and proceed strictly according to the book. In fashioning compensation plan performance criteria, plan designers should focus on criteria that relate to paying attention to details, for example, reduction of defects through quality checking. Goals that involve making decisions or taking risks, for example, developing product promotions, would be poor choices for compliant personalities. As is the case with high-S people, compliant personalities will not respond well to variable pay opportunities that are based on new business initiatives. If at all possible, the performance criteria for high-Cs should be rooted in clearly communicated and well-established standard operating procedures. Success in meeting plan goals ought to be based on criteria that require repetitive, flawless execution. Once established, the performance criteria should not be changed until the plan has terminated. High-C people will value performance criteria that are objective and measurable, as long as they are directly aligned with the role (job description) of the employee and well communicated. However, they will also accept evaluative (i.e., subjective) performance criteria, but only if they receive reassurances that management will be even-handed and fair in its assessments and that the employees inability to meet expectations will not be dealt with harshly. Performance goals. High-C personalities will avoid risk if they can. Goals that are set for such employees should reflect this risk avoidance.

MARCH/APRIL 2002

57

PLAN DESIGN Compensation

Minimum acceptable performance thresholds should be set as low as possible. The goals themselves should be only slightly challenging. In other words, as much reassurance as possible should be put into the variable pay plan, and as much risk as possible should be taken out. Allowing high-C people the chance to participate in the goalsetting process is problematic. Their natural tendency to avoid risk and conflict will make them reluctant to commit to goals presented by the company that they view as too difficult. Conversely, their sense of soldier loyalty may cause them to accept, silently and perhaps resentfully, the goals they are given even if they believe the goals are unattainable. Such an employee can be defeated before the game begins. Performance assessment basis. Highly compliant people will prefer to have their performance based on team results. Operating in teams gives the high-C people the support they need, as long as the team values what the high-C is able to do best, which is attend to details and operate strictly according to established procedures. Reward distribution basis. Compliant people do not need individual recognition. They may even avoid it. They prefer to work in teams, and they will accept team-based rewards and willingly will share them equally with other team members. Their need to avoid conflict makes them more comfortable with an equal distribution of rewards than a distribution based on individual contribution factors, which can cause internal discord. If rewards are given to a high-C person on an individual basis, such rewards should focus on their accuracy and thoroughness in completing the tasks that were assigned to them. The amount of money at risk relative to total compensation. Because compliant personalities are the most risk-averse group of the four mentioned so far, they are far less likely to want substantial portions of their income put at risk in variable pay programs. If they are placed into such plans, the amount of money placed at risk should be as small as possible while still retaining some impact as a motivator and communicator. Compliant personalities will be willing to accept some risk if the performance criteria and goals are team based and well connected to standard operating procedures that do not vary. In such situations, the high-C person will feel more in control of the outcomes that result in additional income. Compensation plan designers ought

to build low pay-at-risk into plans for compliant personality types. Type of reward. In addition to cash, rewards for people with compliant personalities should include psychic rewards that are personalized. Personalized gifts, such as watches or jewelry, would be good choices for high-C people. Personal letters of commendation that focus on the accuracy and precision of the employee in meeting their objectives would also fill this need. Frequency of payment. Highly compliant people are natural worriers. They do not require frequent motivation, but they do require frequent reassurance and feedback on how they are doing. In a variable pay plan, this can be delivered in precise and concrete short-term performance feedback. Such feedback will be reinforced if used as the support for small, interim incentive payments. Pay plan communication. The focus of compensation plan communications for high-C people should be on the need for teamwork and should state in detail how feedback on performance criteria will be collected and delivered to plan participants. Communications should state precisely what the goals of the company are. The high-C will need to be sold on the program, in great detail, to feel comfortable with it. Once sold, however, the high-C may become the plans most ardent supporter.

Communicating variable pay plans to people with highly compliant personalities should focus on the need for everyone to do their jobs and execute their tasks flawlessly.
Communicating variable pay plans to people with highly compliant personalities should focus on the need for everyone to do their jobs and execute their tasks flawlessly. The role of the employees, even more than the business goals and

58

COMPENSATION & BENEFITS REVIEW

PLAN DESIGN Compensation

objectives, should be explained in as much detail as possible, including the resources that will be available to employees to be successful. If the compensation plan is a new pay initiative, then the communication to high-C people should be planned in great detail so that it can be presented to employees down to the individual employee level.

Conclusions That Can Be Drawn from the Model

One size does not fit all. It is an old saying but true in this context. Money may be a universal motivator and communicator, but money is not really what compensation plan design is all about. The message is usually more critical to the success of a compensation plan than the money. It is clear, not only from the DISC personality model but from experience with human interaction, that people are different. They think differently and react differently. It is possible to successfully design and implement compensation plans without knowledge of the personality profiles of the plan participants. History has demonstrated this. However, history also demonstrates that many well-intentioned and well-designed compensation plans fail. The real question, then, is, how can we increase positive outcomes and decrease negative outcomes? How can we improve the odds of successfully implementing a new compensation plan? Understanding people is one of the keys.

Practical Use and Considerations

It would be impractical to design variable pay plans in four different versions to suit each personality type. This would clearly be the case when designing a compensation plan for a large number of employees. But in situations involving a compensation plan for only a few plan participants, personality profiles might be valuable. Even in situations involving large groups of employees, there are two compelling reasons to include personality profiling in the discovery phase of a compensation plan project. First, understanding the predominant personality type, even in large groups, can positively influence the plan design and make success more likely. Second, even if four versions of a compensation plan cannot reasonably be developed to accommodate each personality, it may still be possible to modify the communications and training associated with the new compensation plan to be more effective in a successful implementation of the plan. Instead of one memorandum, for example, to all employees to announce the advent of the compensation program, two or more memoranda or communication sessions could be developed to address each one of the personality styles present in the employee population. Even if this were not possible, understanding the predominant personality type of the employees to be covered by the new plan can make such planned communications and training more effective.

Acknowledgement
The author wishes to express sincere thanks to Grover Clark for his assistance in developing the ideas presented in this article.

Notes
1. Weinberger, T. E. (1996, June). Bell curve pay: Realizing maximum return from new hires. ACA News, 39(6). 2. Feder, I. (2000). Rewards for the new millennium. WorldatWork Journal, Second Quarter, 7. 3. Roodt, K. A reliability and validity study on the discus personality profiling system. Durban, South Africa: Technikon Natal.

Ted Turnasella is the principal consultant for Comp-unications, a compensation consulting firm that develops effective compensation programs of all types. He has more than 25 years of experience in human resources, both in the corporate world and as an independent consultant. His experience covers the manufacturing, banking, publishing, retail and travel industries. He has written many articles for professional journals, spoken at the national conference level and appeared on network television as an expert speaker on human resource issues. Turnasella holds a bachelors degree from Saint Peters College in Jersey City and a masters degree in labor and industrial relations from New York Institute of Technology. He is a member of the Consultants Forum of the Society for Human Resource Management and World at Work.

MARCH/APRIL 2002

59