What Happens When Employees Trust Leaders, But Not the Comp Plan?

Ever run into a situation where employees say that they trust a company’s leaders but not its compensation plans? Where an otherwise trustworthy and straight-shooting management team puts out a compensation plan in which employees claim to have no faith?

I have, and have often puzzled over these (to me) inexplicable contradictions. Then Charles Green, in his series Why We Don’t Trust Companies, shed new light on the matter for me.

From Charlie’s first post in the series (bolded emphasis mine):

Companies don’t understand trust. … companies rarely distinguish between something as basic as trusting and being trusted. Therefore, if they score low on trust surveys, they can’t tell whether the solution lies in being more trustworthy, or in being more trusting.

By default, most of them implicitly assume the issue is trustworthiness. This means they completely pass up opportunities to create trust by trusting their stakeholder constituencies, or by valuing the propensity to trust within the organization. Worse, they may even harm trustworthiness by assuming that it requires greater internal controls, thus limiting employees’ ability to be trusting.”

Lack of an up-front commitment

And so I wonder: how often the choice of employees to withhold trust is not a response to the perceived characters of leaders, but rather to their practices and actions? I have also observed that these “trust-less” compensation plans, more often than not, involve a bonus or incentive award determined entirely by management discretion and a plan that nobody is willing to put in writing.

Are these managers, by their unwillingness to make an upfront commitment to or document the manner by which awards will be determined, communicating a lack of trust in their employees … and are employees simply responding in kind?

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Trust, as Charlie often says, is personal and reciprocal. How does this square up with our compensation plans and practices?

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

Contact her at abares@alturaconsultinggroup.com.