a look at how we reward the work of today...and tomorrow
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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.
Development 1: Work is Social and Connected
A Brief History of Social Connectedness in Rewards
1930 1940 1950 1960 1970 1980 1990 2000 2010
Scanlon Plans Gainsharing
360 Degree Feedback
Peer to Peer Recogni:on
Viral and Social 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 Le\er 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 bo\om-‐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
Development 2: Work That Ma\ers
Work That Ma\ers: 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 Ma\ers: 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 ma\er to them. David Ulrich, Wendy Ulrich
Work That Ma\ers: 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 Ma\ers”?
• Work that ma\ers, 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 Base Pay Increase
$5 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
Crea:ng Compe::ve Advantage
But
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 a\enKon 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 Bo\om 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
750 broad-‐based incen:ve plans covering 1.5 million employees Median gain for every dollar spent
on incenKve awards
$2.34
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 from the Economic Big Bang: “Sameness in compensaKon was suddenly over. Instead of worrying about what the other guy is doing, companies began to worry about what the business needs. Real Pay-‐For-‐Performance Study
Lessons Learned: “Surveys may show what is compeKKve, but seldom report on how pracKces work and add value to the business proposiKon.” CompensaFon and HR During Crisis: 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?
Designing Business-‐Based Rewards
Strategic PrioriKes
Reward Elem
ents
Reward Strategy Matrix
Sample Reward Strategy Review Reward Elements Strategic Priori:es
Double Number of Clinics
Grow Net Income Strengthen “One 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 Technician
Reward standardizaKon project milestones
Performance Management
Recogni:on Celebrate new clinic openings
Recognize “One Group” 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
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