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Are pay and promotion decisions the ultimate expression of company values?

The concept of values is rooted in the belief that some things are more important than others.   When it comes to expressing company values, one can argue that nothing is more important than methods used to decide who to hire, promote, and financially reward.  These represent concrete actions to invest in some people over others based on their perceived worth to the company.  When a company promotes or compensates an employee it is implicitly saying, “we value this person so much that we have decided to give them more money, responsibility, and power regardless of what other shortcomings they may have”.   

Promotion and pay decisions are ideally based on a systematic and careful review of what the person has accomplished, how they act within the company, and their progress against business objectives.  In these cases, promotions and pay underscore the company’s commitment toward its stated values and strategies. 

But all too often promotion and pay decisions are made hastily, focus on short-term operational needs, or are used to prevent people from quitting rather than rewarding their contributions to the company.  These types of decisions often over-emphasize one aspect of performance while ignoring others.  These types of promotion and pay decisions send a message to employees that the company may say it values certain behaviors but what it truly rewards is something else entirely.  The result is increased employee cynicism toward the company and its supposed commitment to its so called “core values”. 

Promotion decisions are probably the most visible expressions of  a commitment toward corporate values (or a lack thereof) because they are highly visible to everyone in the organization.  When employees see a colleague get promoted they immediately draw conclusions about why this person was rewarded with more pay and leadership authority.  They view it as an implied endorsement that all the things this person did, both good and bad, are valued, accepted, and tolerated by the company. It does not matter if these conclusions are accurate because, as they say, “perception is reality”.

Perhaps nothing says more about what a company truly cares about than pay and promotion decisions.  What systems does your company have in place to ensure these decisions reflect its stated values?  Do people understand how pay and promotion decisions are made?  Is the process transparent or are employees left to make up their own reasons for why some people were rewarded while others went unrecognized?  Are you certain that your company is honestly putting its money where its mouth is? 

Note: This blog is an excerpt from my book “Common Sense Talent Management:  using strategic human resources to improve company performance.”     

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