A Look at How We Reward the Work of Today - and Tomorrow
A Look at How We Reward the Work of Today – and Tomorrow! February 27, 2012
Things We’ll Cover • Six developments aﬀecKng work and how we reward it. • What each of these mean for how reward programs are designed, managed and communicated. • Pulling it together – how rewards can transform the business.
A Brief History of Social Connectedness in Rewards Scanlon Plans Peer to Peer Gainsharing Recogni:on 1930 1940 1950 1960 1970 1980 1990 2000 2010 360 Degree Viral and Social Feedback Rewards
Viral and Social Rewards Viral Pay System • Proﬁt based basket of “Tokens of AppreciaKon” • Three rules: – All tokens must be given away – You can’t give tokens to yourself – The President is not eligible
Viral and Social Rewards Bo@om Up, Employee Directed Performance Management • “Colleague Leer of Understanding” • Key elements of the CLOU – Personal commercial mission – AcKviKes – Steppingstones – Time commitment – CLOU colleagues
Why “Social and Connected” Rewards? • Builds culture of employee parKcipaKon and ownership. • A boom-‐up, rather than top-‐down, management system taps into employee perspecKves and knowledge. • AcKve rather than passive role for employees. • Transparency helps build trust and belief
Work That Maers: Task Signiﬁcance • Research studies by Wharton Professor Adam Grant demonstrate importance of “task signiﬁcance” in driving producKvity and performance • Task signiﬁcance = understanding the posiKve impact of your work
Work That Maers: The Power of PersonalizaKon Too ofen employees feel emoKonally disconnected from the work they do; their work may capture their talents and Kme, but not their heart and soul. Great leaders personalize work condiKons so that employees know how their work contributes to outcomes that maer to them. David Ulrich, Wendy Ulrich
Work That Maers: Passion and Job Design • Passion: A Guiding Principle • BoosKng morale and producKvity by aligning employees with work they are most passionate about • Ask frequently “what is your passion?”, and alter job descripKon based on reply
Why “Work That Maers”? • Work that maers, that taps into an employee’s passions and draws upon their parKcular strength and talent is a reward that beneﬁts the employee and the organizaKon. • What role should HR play?
Development 3: Salaries as Long Term Investment CreaKve Commons Photo by Wonderlane
Salary Increases Are Your Most Expensive Reward $1 $5 Base Pay Increase = Lump Sum Bonus *Over a ten year earning period.
Salaries as Long Term Investment Core Reward Principle: Tie the term of the reward to the term of the accomplishment. Base salary increases are a long term award that must be Ked to the individual’s ability to contribute on an ongoing basis, not just this year but over the longer term
Why Salaries as Long Term Investment? Not Just Compe::veness But Crea:ng Compe::ve Advantage
Development 4: The Adaptability ImperaKve CreaKve Commons photo “Rainbow” by EVoo73
The Case Against Variable Pay Of course, it is possible to get people to do something. That is what rewards, punishments, and other instruments of control are all about. Alﬁe Kohn Our business operaKng systems… how we moKvate people … is built enKrely around these extrinsic moKvators, around carrots and sKcks. Dan Pink
The Case Against Variable Pay: Where They Are Right IncenKves do focus people IncenKves have the potenKal to pit people against one another IncenKves can undermine creaKvity by aiming aenKon at narrowly deﬁned tasks and goals IncenKves ofen produce unintended consequences.
The Case Against Variable Pay: Where They Are Wrong • IncenKves – well conceived – are not just codiﬁed bribes • IncenKves can be the centerpiece of a powerful, posiKve partnership • IncenKves oﬀer a means of creaKng and sharing economic success
The Agility ImperaKve and The Boom Line 1. (Well conceived) variable pay is here to stay 2. We need to (seriously) step up our variable pay game
What Research Says About Variable Pay CARS (Consor:um for Alterna:ve Reward Strategies) Research $2.34 750 broad-‐based incen:ve plans covering 1.5 million employees Median gain for every dollar spent on incenKve awards
Why “Agile” Rewards? • The employment relaKonship is, ulKmately, an economic one and the employee has a stake in the ongoing viability and success of the organizaKon. • Well-‐conceived and executed, fosters a “win-‐win”.
Development 5: No More Mindless Market Mimicry CreaKve Commons photo “Four Wise Monkeys” by Ferdosi
On Mindless Market Mimicry In the Age of DiﬀerenKaKon Can we benchmark our way to success? Answer: No, We Cannot!
What Research Says About Mindless Market Mimicry Lessons Learned: Lessons from the Economic Big Bang: “Surveys may show what is compeKKve, “Sameness in compensaKon was suddenly but seldom report on how pracKces work over. Instead of worrying about what the and add value to the business other guy is doing, companies began to proposiKon.” worry about what the business needs. CompensaFon and HR During Crisis: Real Pay-‐For-‐Performance Study Which SoluFons Add Value (WorldatWork Total Rewards Conference PresentaFon based on study of banks hit by subprime crisis.
Development 6: Designing for Business Success CreaKve Commons Photo “Success Ahead” by MarsMet54
Designing Business-‐Based Rewards What are our strategic priori:es? What are the organizaKon’s most important objecKves? What are the top challenges it faces in trying to achieve these objecKves? Who are our compeKtors? How do we stack up against them? What are the primary things driving revenue? What factors most impact our proﬁtability? What are the biggest threats to our growth and success? What are the biggest opportuniKes for our growth and success?
Sample Reward Strategy Review Reward Elements Strategic Priori:es Double Number of Grow Net Income Strengthen “One Clinics Group” Iden:ty Base salary PosiKon Technician Salaries at 75th %ile Annual bonus Redesign annual bonus plan to focus on group-‐ wide net income Other cash rewards Referral bonuses for Reward standardizaKon Technician project milestones Performance Management Recogni:on Celebrate new clinic Recognize “One Group” openings behaviors Development TuiKon beneﬁt for Technician degree Beneﬁts
Business-‐Based Rewards Are TransformaKve How rewards work to transform the business: 1. Focus: Call out top prioriKes 2. Guide: Guide employees to areas where their eﬀort can create the most value 3. Create consequences: Create consequences, ﬁnancial & non-‐ﬁnancial, for success & failure 4. Weaken silos: Encourage teamwork & collaboraKon 5. Strengthen culture: Reinforce culture and values 6. Drive development: Direct, drive and reward the development of skills and capabiliKes 7. Impact career choices: Highlight career choices that are aligned with strategic needs
Presenter Info Ann Bares Managing Partner Altura ConsulKng Group LLC abares@alturaconsulKnggroup.com Website: www.alturaconsulKnggroup.com Blogs: www.compensaKonforce.com www.compensaKoncafe.com