Why Even Great Compensation & Rewards Can’t Overcome a Bad Boss

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Think that a generous, transparent, strategically aligned rewards package will “compensate” for the fact that you have lousy managers in key positions that company leadership is simply unwilling to address?

Better think again.

A recent study by Zenger/Folkman featured in a HBR blog post, provides some compelling evidence on the impact of bad bosses on employee satisfaction, engagement and commitment. The study centers on the effectiveness of 2,865 leaders (as judged by bosses, subordinates, peers and other colleagues via a 360 degree assessment) in a large financial service company.

Good rewards can’t overcome a bad boss

As the chart below shows, the sales, engagement and commitment levels of employees working for the worst bosses (those at or below the 10th percentile) reached only the 4th percentile.

As the article states, this suggests that “96 percent of the company’s employees were more committed than these mumbling, grumbling, unhappy souls.”

The other end of the chart shows that the employees working for the leaders with the highest assessments are more satisfied/engaged/committed than 92 percent of their peers.

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Although it may temporarily salve their pain — and the tough labor market may prevent them from jumping ship — not even a world-class rewards program will be able to override the impact of a bad boss on employee morale and productivity.

Many of us can vouch for this fact based on personal experience.

Are you letting lousy bosses undermine your reward investments?

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.


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