Are you benchmarking…or copying ?

Are you benchmarking… or copying

I once presented a new annual incentive scheme to the Board of my then-employer. The Board members liked the content of the plan, and one of them asked me, as a favour, to go and present it to the CEO and HR Director of another company that he was Chairman of.

So I headed to that other organisation, totally unrelated to my company except for having this Board member in common. We were not in the same industries, totally different in size, complexity and business model, and not operating on the same markets internationally.

I tweaked my presentation to give them some relevant background information as to why we had decided to propose certain features in our scheme. I wanted to make it clear that the plan had been designed in order to support some specific goals of the company, and whatever I was presenting to them was with the intent to do some compensation benchmarking, share some ideas and give them some direction for their thinking when designing their own scheme.

So imagine my reaction when they enthusiastically said : “This is a great plan ! Is it OK if we apply the same rules to our company, would you have a problem with that ?” Of course I did not have a problem with them using the same design, we were not competitors and ultimately, I have no copyright on the incentive programs I design for my employers 😉

However I did tell them that I felt that the plan was not adapted to the specifics of their own organisation, that it was probably too complex for their size and type of population, and that there were easier ways for them to implement pay for performance at the individual level as well as linking the bonus to company results. After all my employer was working in multiple industries and had thousands of employees, while their organisation, whilst highly visible at the country level, had less than 200 employees all working on the  line of business.

And, there and then, I effectively became an ad-hoc compensation advisor to them, suggesting some approaches to their bonus pool and the kind of metrics they could investigate for their company. They appreciated that I would brainstorm these with them, and started to understand that while compensation benchmarking is good as you can leverage some ideas, a simple “cut and paste” of another company scheme will probably not bring you the results that you are hoping for.

The same goes for your Compensation strategy, the details of your Long-Term Incentive Plan, the eligibility criteria to some of your retention or recognition schemes etc… We all participate in benchmarking surveys in order to understand what the “market” is doing. But remember that even a very successful incentive plan at your most important competitor cannot be simply benchmarked/copied and deliver the same outcome in your own organisation. Your cultures are different. Your company goals are different. Your strategies and approaches to market are different (or they should, if you want to differentiate). And your HR plans also should be different, if you want them to meet the needs of your company and produce the expected results.

Have you been in a situation where you were asked by management to copy another organisation’s schemes? Did you have to go with it,or did you manage to convince them to go for a unique plan adapted to your company specifics? Don’t hesitate to share your stories in the comments section!

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