An organization’s compensation systems are the most POWEFUL tools to shape behavior and create healthy and happy Hospice cultures. However, most leaders can’t get past the “fear barrier.” Therefore, only the elite of our movement use them insightfully to create fair and rewarding systems…systems that make management vastly easier because they are STRUCTURAL and do not rely on the personal inspection of work that can ebb with energy levels and the constraints of time. Accountability can be “fine-tuned” with a great compensation system. All Hospices that operate in the 90th percentile use creative compensation practices. A Hospice’s biggest quality and financial gains will come from the Attraction of Talent and the compensation of that Talent. 60-65% of a Hospice’s total costs are related to compensation. This is structural. This is the most significant area of operational costs that an organization can address. It is also linked to People Development, the most important area and topic of an organization, as all compensation systems inherently teach. Yet, there are many naysayers regarding use of creative compensation systems…
Those that say that compensation (incentive) systems do not work are ignorant of human behavior as well as the behavior of all forms of protoplasm. We are constantly seeking our “food” and “means” of survival. We can’t do anything else. All living creatures are designed to sustain their lives. With this said, there are often “academics” that propagate studies that show little, no and even negative results with “different” compensation systems. This is true. However, one has to look at the specific compensation system in all cases. If it is a flawed system or is based on flawed ideas, then of course it will fail or be less effective than hoped. An example of this is a compensation system without “digs” or “dings” related to non-adherence to the basic Standards of an organization. Most people think that creative compensation systems are only about the upside, but in a great compensation system, there is a downside if you don’t do your job to Standard. However, most systems don’t have this component! This is a component that can make a world of difference. A great compensation system is a balance of upside and downside.
Also, we are all biased regarding our ideas and tend to favor those viewpoints that conform to the beliefs we already hold. There certainly are studies that attempt to persuade that incentive compensation doesn’t work. Again, these usually come from academics that come from extremely “left” institutions that would like everyone to be paid the same. On the other side, there are TONS of studies that show that compensation systems have a HUGE impact on human behavior. In fact, it takes little more than observing any aspect of life for this fact to become self-evident. I mean, when Medicare changes how Hospices are paid, do we sit around and say “That’s nice but I think we’ll just keep doing our business the same old comfortable way?” No…we are forming committees, getting involved with discussion groups and are seeking all the insight we can get to address the Medicare payment changes. We are INTERESTED. Well, the same thing happens on an individual basis, only in this case, it is your organization that is the “change agent” of payments…and a change in compensation DOES get people’s attention!
Compensation systems were the beginning of MVI. It’s where we got our start back in 1996. Following the herd will always get an organization to average. So why not be an outlier, freak or what some call a “measurement error” when it comes to quality and financial performance? It is completely your choice! But you can’t continue to do it like everyone else and get in this club!
~ Your objective friend, Andrew