Total Rewards is a key instrument to attract and retain talent. But it is also one of the major areas of concern for both employees and employers. Employees think that remuneration hardly commensurate with skills, experience, efforts, and output and for employers, it is not viable to offer cash to meet employees’ expectations. It’s the industry dilemma for years which we, as HR professionals have yet not been able to address. Please have a look at the below situations and see if you can relate to them.
- HR has wonderful policies or high-end benefits, but 80% of employees may not be even aware of them leading to a huge gap in actual and perceived values. Hence, it does not give any competitive advantages even if the investment is way higher than that of competitors
- Multigenerational workforce with varying needs but rewards mechanism, benefits, and other offerings are sort of one size fits all
- We need to retain the top or critical talent who has got a lucrative offer from the market. If retained and match the offer –damage internal parity, but if not retained – billing loss and may need to replace the position with even much higher pay
- Most of the hiring may turn out to be a niche skill hiring at premium pay but when seeing the deployment afterward most of them might be allocated to projects requiring vanilla skills. It causes either revenue leakage if wrongly hired or employee dissatisfaction if inappropriately deployed
- Urgent need to close the critical position (just in time hiring need) and shortlisted candidate having 2-3 offers in hand. If not hired – billing loss or delay in client deliverables but if hired at a premium price – impact on margin and inability to deploy in another low margin projects in future leading to employee dissatisfaction
- Unique requests like rehiring in a few months, off-cycle promotion or increment, relocation of resources, exceptional reimbursement, etc. but nothing much can be done because of rigid and restrictive HR policies with very limited alternatives at hand to meet the expectations leading to employee dissatisfaction
There are many more such examples that all of us encounter very frequently and we probably have accustomed to labeling it as an industry problem.
Let’s see the scenario given in the below table. We have business requirements to meet organization goals, policies and practices to support business and reward professionals who are supposed to execute and ensure that meet business requirements. But we can see the big disconnect which affects the whole ecosystem and put us on the backseat just to struggle with our problems every day.
|Business Ask||Profitability, Talent Supply, Readiness, and Retention, Happy Employees|
|Nature of Rewards, Policies, and Practices||Just in Time Hiring, Rigid Policies, Functional needs supersede Org & Employees’ needs|
|Rewards Professionals’ Typical Mindset/Way Of Working||Fire-Fighting Mode, Policy-Driven, Bureaucratic Approval Process, Solutions Not Scalable (Handle Case By Case)|
Now, pause for a moment and think if we, as Total rewards professionals, cannot address these problems, how on earth, we are of any help to the business. It’s high time that we re-think what rewards means for us, business and employees. Let’s try and develop a simple and effectively implementable framework which keeps employees’ experiences in the center and support business & talent strategies. Let’s move from Total Rewards, which is unilateral and not valued or felt on grounds to Total Value which is multilateral and considers what exactly employees and other stakeholders mutually value. Let’s move from business and leadership centric rewards to employee-centric rewards that cater to the multigenerational workforce and business in a timely and cost-effective manner.
We need a reward framework that is co-created involving relevant stakeholders and is supported by other functions and leaders. Let’s have a look at the following tricycle like shape. It depicts that in order to have happy employees and happy employer there are three critical pieces which need to work together with proper guidance and governance.
Let me elaborate on this piece through the below table.
|Key Pillars||Key Factors|
|Organization Leaders||Right Talent||Trust||Empowerment||Governance|
|Rewards Policies & Practices||Simple||Relevant||Connected|
|Rewards Professionals’ mindset||Progressive||Strategic||Solution-oriented|
Total Value Framework
For any organization, it important that it hires the right talent who are good cultural and contextual fit, have the right attitude, clear line of sight with organization goals and never puts personal agenda or functional preferences above organization goals. Talent acquisition team/hiring managers / HR should put all their energy to filter the right talent at the time of hiring and the rest of the things would follow. With the help of technology, now it is not difficult to identify high performing criteria, cultural elements, etc. unique for an organization and see if that fits well with the potential hire. Many HiTech companies are already doing it.
It is equally important that organization trust their leadership and remove unnecessary controls, approval metrics, bureaucracy and make the decision-making process smoother and faster. It’s common that we get into a trap of applying theory X lenses and believe that managers would misuse the authority for their teams’ benefits or otherwise and put a lot of inefficient approval steps. You may re-call examples related reimbursement approvals, increments and promotion recommendations, etc. I believe that business leaders should be given enough flexibility to manage teams’ morale and performance to get the best of available talent for their deliverables under unique circumstances.
In order to get the best use of the right talent, it’s critical to empower such talent. It means that they should have access to relevant data, real-time analytics, and dashboards for data-driven insights. They should be provided flexibility, broader policies/guidelines refer to and decision-making power. They should be encouraged to experiment and come up with a good mix of short term and long-term solutions.
Rewards Policies and Practices
In this VUCA world, it’s imperative to have simple and agile policies and practices that are relevant and able to connect well with people. We can pick any reward tool and analyze if it is a sort of obstruction or enabler for business and people. Let’s take an example of salary review- In many companies, salary review is done with a lot of considerations on equity, fairness, competitiveness, performance, etc. with good flexibility, governance, and guidelines but it remains accessible to leadership and end-users are not aware of the philosophy, quality of the system, efforts gone into and always think that it’s unfair. In the absence of rich data, managers cannot have a holistic performance appraisal discussion with employees. Many a time, final increment decisions are news to even managers themselves. But we expect managers to have good discussions with the team and explain the increment recommendations. We may also find that many organizations provide good benefits but either it is of no use to employees or they are not aware of it. It is a huge investment with no ROI for the organization.
One way to address this gap is to create a task force / cross-functional team to co-create policies and improve practices. We should have representatives from various functions, grades, locations. The group members may be changed every 2/3 years. This group would help to develop the best policies and practices and would be the brand ambassadors of those policies. They would also help with periodic connect with a larger employee base and clarify queries and seek feedback for continuous improvements. All this should be supported by an effective way of communication which may include gamification, bots, AI/ML, etc. for targeted communication connected with individual needs and not generic policy roll out or reactive communication when asked by employees. All these efforts would certainly make it simple, agile and connected with employees.
Rewards Professionals’ Mindset
We may have ideal policies, practices and good talent but it’s important how we leverage those to create an environment where multiple stakeholders work together for the greater good of the organization. We, as rewards professionals, are in a profession where we get sudden and unique requirements very frequently which may not be fully catered well within the policy framework. With a unilateral, policy-driven and controlling mindset, we may not be able to support business and people in the best possible manner. I am not saying that policies and controls are not important but many a time, knowingly or unknowingly, these are used as hindrance without exploring alternatives. Also, we are mostly caught up with our routine work and do not give enough focus on strategic scalable interventions based on our learning from day to day work. We must work with a positive and progressive mindset with a solution-oriented approach to help the organization achieve its short term and long-term goals.
We generally make the ecosystem where most of the tasks are managed through high governance and controls. Instead, we should rely on employees to a greater extent and they should be made responsible enough to follow policies, procedures or defined exceptional routes to always remain within organizations’ and regulatory guidelines. As there could be human errors, communication gaps, etc. because of which we miss following said guidelines, we must have a mechanism to have good governance. We must have periodic reviews, internal audits, dashboards, and regular orientations and communications to ensure that employees are aware of and following the guidelines. Any gap should be identified in time and appropriate actions should be taken. But no point making the regular tasks so bureaucratic through unwarranted controls that it takes ages to move things forward and demoralize employees.
I strongly believe that given the changing needs of the business and people, there is a greater need to filter the right talent intake, empower leaders, create agile policies and practices which remain relevant and connected with people. All that must be supplemented with good governance mechanisms for timely checks and balances. One thing which we, as rewards professional may generally miss is to reflect and see what takes their greater portion of efforts and if that really supports the organization. We may observe that most of the time we are caught up in operational activities and not have time to support organization strategically. We must change our mindset and be more open while listening to business, people, and industry and work with a solution-oriented approach. We must provide scalable, timely and relevant solutions and create an ecosystem where various teams come together and take organization ahead on the growth curve and make the organization a happy place to work