Pay and Personality

Abstract

Compensation plan design focuses on management’s pay philosophy, the organization’s expectations with regard to business results or effective work behaviors and the kind and amount of rewards to be offered. The premise is that rewards can shape and drive behavior. Research would suggest that this is true. The effectiveness of compensation plans, however, can be increased or diminished by a factor that is rarely accounted for in the design and communication of compensation plans—the personality profiles of the employees themselves. This article marries compensation plan attributes to a commonly used personality profiling device called the DISC to demonstrate the considerations that would come into play for compensation plans designed for four different personality types. In addition to compensation plan design considerations, personality also plays a role in how compensation plans are communicated to employees, a critical step in implementing compensation plans.