Talent rewards have been an essential aspect since the dawn of Human Resources. Rewards are the single most powerful tool which can drive the desired behaviour among colleagues, high performers, performance-oriented employees and more, a kind of behaviour the organisation needs. So when an employee clears a milestone for example in digital quotient (digital efficiency), the company incentivises the employee, rewarding the desired behaviour.
So in the modern age of work, where the desire is to bring consistency in behaviour, how can organisations create the necessary and favourable situations for the employees? At the TRWC conference, Mercer’s Mansee Singhal took the stage to discuss the nuances behind an effective reward program, which can enable employees & employers to win-win.
Incentivising with ‘Performance-oriented’ programs
Mansee Singhal emphasised the need for employers to incentivise an employee as a reward for their growth behaviour. To encourage ‘thoughtful behaviour’ among the employees, the reward program has to be carved out around the same ethos to drive the ecosystem at an organisation.
The reward framework has to be internally equitable and externally competent as it should involve converting the simplistic ‘tenure-linked’ programs into ‘performance-oriented’ programs as well as be agile in nature.
To encourage ‘performance-oriented’ programs, the subject of ‘pay equity’ always comes up. So what is pay equity? Mansee Singhal reiterates as “ similar pay for similar work without any explainable gaps.” Every employee has a certain set of tasks and is paid accordingly. Yet many factors are involved when it comes to rewarding the set of tasks -
- A manager’s subjectivity
- Tenure of the employee
- Role of the employee
- Market data and insights
Mansee emphasised that HR leaders are not “fundamentally accountable of every employee’s pay to be equal but they are accountable to have principles in place from which HR can stand by.”
To encourage “performance-oriented programs, HR requires to understand the omnipresence of ‘agility’ when come to crafting reward strategies. Mansee shared how in the pandemic, many organisations’ HR department was very active in managing the situation. The employees - the most important assets - were saved by investing in them irrespective of the budget and hikes, which were cut down. The employees’ relevant milestones were catered and a large ecosystem was to take place instead of the pre-pandemic steps.
Pay per position, Pay per person and Pay per performance
The modern phenomena of ‘hyper-personalisation’ have surrounded Human Resource strategies nowadays. Employees are looking at their compensation and benefits with hawk eyes. They are looking for better coverage and planning a wealth-creation journey for themselves.
Mansee suggests that the reward programs need to be agile and involve personalised aspects for every employee personnel. An ideal rewards program may look into :
- Pay per position
- Pay per person
- Pay per performance
The journey of wealth creation for the employees has to be structured and provided by the organisation. Mansee emphasises that modern reward programs shouldn’t be about ‘position’ but the ‘dimension’ of the pay. There has to be a sense of purpose in the reward strategies. If an employee is working transactionally then they would expect the rewards in the transaction. Similarly, an employee invested in their own career ecosystem would look for alignment in their growth map.
Mansee encourages that ‘pay equity’ could be part of the company’s philosophy. A straight line has to be drawn when it comes to choosing an organisation’s policies - either you have pay equity or you don't have pay equity.
The organisation and the HR department can assess their choices by asking if their hiring quality is diverse or not. They can also look into their internal labour vs external labour ratio. As per usual norms, External hires get better pay rise than internal hires and that is something the rewards programs can solve.
The company’s philosophy needs to be clear too when it comes to allowing people to leave the organisation. The company’s culture and commitment to the employee are important too. After all, rewards in isolation may or may not have any value!