The problem of action and interest alignment: Beyond job requirements and incentive compensation

Abstract

We introduce two concepts, action alignment and interest alignment, that we propose to help explain the linkages between employee behaviors and organizational strategy. We first examine the problem of action alignment, developing employee ability to identify and engage in behaviors that most effectively lead to the realization of the goals of organizational strategy. In particular, our discussion of action alignment focuses on the issues of employee line of sight to organizational strategy and the development of shared mindsets within the organization. We argue that aligned actions involving employee behaviors that are discretionary and difficult to specify in advance are especially important because they hold the potential for sustainable competitive advantage leading to organizational value creation. Then we turn the problem of interest alignment, how to motivate employees to engage in such discretionary/unspecificable aligned actions. We argue for moving beyond the common emphasis on incentive compensative in achieving interest alignment and explore the role of distributive issues in compensation and the role of intrinsic factors deriving from the inherent value and meaningfulness of work for employees. THE PROBLEM OF ACTION AND INTEREST ALIGNMENT: BEYOND JOB REQUIREMENTS AND INCENTIVE COMPENSATION AbstractWe introduce two concepts, action alignment and interest alignment, that we propose to help explain the linkages between employee behaviors and organizational strategy. We first examine the problem of action alignment, developing employee ability to identify and engage in behaviors that most effectively lead to the realization of the goals of organizational strategy. In particular, our discussion of action alignment focuses on the issues of employee line of sight to organizational strategy and the development of shared mindsets within the organization. We argue that aligned actions involving employee behaviors that are discretionary and difficult to specify in advance are especially important because they hold the potential for sustainable competitive advantage leading to organizational value creation. Then we turn the problem of interest alignment, how to motivate employees to engage in such discretionary/unspecificable aligned actions . We argue for moving beyond the common emphasis on incentive compensative in achieving interest alignment and explore the role of distributive issues in compensation and the role of intrinsic factors deriving from the inherent value and meaningfulness of work for employees.2

Human capital in family businesses: Focusing on the individual level

“…First, it identifies the key role of individuals' knowledge, skills and abilities. Second, it recognizes the fact that individuals' knowledge, skills and abilities are not sufficient to create value for an organization, unless they are used through individual behavior (Colvin & Boswell, 2007;Wright, McMahan, & McWilliam, 1994). In other words, knowledge, skills and abilities are necessary but not sufficient for individual behavior to be in line with a firm's strategy and lead to actual performance (Gottschalg & Zollo, 2007;Wright & Snell, 1991).…”

Ethical Dilemmas in Value Delivery: Theoretical Conditions

“…Therefore, we believe that this term is not completely suitable in the context of customer value. Furthermore alignment of interest is also tied to action (Colvin and Boswell 2007). I.e.…”

Behavior of Internal Customer in Family Business: Strategies and Actions for Improving Their Satisfaction

“…This human capital is a vital resource for the strategy of organizations (Colbert, 2004), but we cannot forget that the knowledge, skills and abilities of individuals are not enough if we want to create value for an organization (Wright et al, 1994; Colvin and Boswell, 2007). …”