Rethink both the Process of Rewards and Goals of Performance

Consumer behaviour experts swear by the statement,” Buying is an emotional decision”. All of us have experienced it in our daily lives. Irrespective of all the data, analysis, peer influence, advertising, and the price, ultimately the decision is influenced by our subconscious biases mainly driven by the primal stimulus- Emotion. The same thing can be said for rewards.

Rewards over years of industrialization too evolved from Inflation led indexing, seniority-based wage scales, merit-based increments, incentives to drive the desired behaviours, target-based to skill-based rewards, both cash, and kind. There are several innovative practices in the industry all geared towards performance as the primary goal.

“My attempt here is to make a case to rethink both the process of rewarding and the primary goal of performance in the so-called VUCA world. The digital economy may require a different approach to rewards.”

• Let us take up the process first. The digital platforms across all business operations are ubiquitous and HR is no exception. Recruitment to on-boarding, collaboration platforms to networking applications, dynamic databases on the cloud which are more flexible and agile, performance, learning management systems to exit processes, can all be digitized either in one platform or multiple applications. More importantly, most of these applications can be personalized to cater to the individual persona. Recruitment applications are able to use basic machine learning to source and match individual skills to the needs of an organization.

• Likewise learning management systems are personalizing individual training to the needs of an individual and so on. The endeavours to hyper personalize rewards to suit individual needs is however still lagging behind. Having said that few progressive companies have already kickstarted this, notably in the start-up space. Imagine, peer assessments or recognition of an employee for exceptional customer service being rewarded on the spot cash bonus, or based on the need of the employee customize the reward, a bike or car, an airplane ticket and stay in his dream destination, the list can be endless, Good digital platforms as we all know can capture the metadata of employee interests and customize the rewards.

• The second a more important aspect is the goal of these rewards. Is paying for performance outdated?. Fundamentally the question pivots on 2 assumptions  1) ROI and 2) Behaviour

I base the premise that there is better ROI if rewards are paid for Capability or what I call learning quotient. In the new age economy, the learning agility or velocity with which the individual learns new skills relevant to the work gives better ROI than performance. It can be argued that ultimately performance matters, yes it does, but if learning is not incentivized in an organization performance over the long run will not sustain.

We value companies for its capability and promise of future growth, in other words, the promise of future performance not only on past performance. Likewise, an individual holds more potential if he or she displays learning agility. Needless to say, promoting and rewarding learning behaviour through reward mechanisms and smart technologies will help a company better navigate the digital world.