Insight-driven HR: A foresight saga? by Charles Cotton

We know that reward is important. For instance, in the private service sector the amount of money spent on salaries is 52% of revenue. Unsurprisingly, such data gets the interest of the finance director, who wants to see a return on this expenditure.

We  know that it’s important to get reward right or, at the very least, not get it wrong. Getting it wrong can have an impact on an organisation’s ability to successfully recruit, retain and engage the talent it needs to deliver sustainable performance.

We also know that financial rewards are just one element of the employer offering. Just as important to employees can be such non-financial rewards as having: an interesting and challenging job; opportunities for learning and development; good working colleagues and clients/customers; a supportive boss and; having some influence on how’s the jobs done, etc.

Yet we also know that reward is often difficult to adapt. In my experience, it usually changes because it needs to as the business environment has altered and there is no longer an alignment between what the organisation requires its employees to do in order for it to be successful and how in return it will reward and recognize them. Too often employers need a burning platform to create the reward change they need. Rarely do I see reward change because an employer has identified an opportunity.

Why is this? Personally, I think this is because while there are lots of reward options or solutions there are also lots of pressures on our time stopping us developing reward insight until it is often too late. What we need to do is make time to reflect on what we’re rewarding and why and how this might change.

Using the CIPD research on the changing nature of HR as a useful starting point, most HR used to be service-driven. Reward was split into various elements (such as base pay, sales and incentives, pensions, employee shares, etc) with these elements being the responsibility of various departments (such as HR, marketing, procurement, secretariat, etc). The credibility of these functions stemmed from delivering excellent service to internal customers.

We have since moved to a process-driven model, where reward is a coherent whole and interacts and supports the other parts of the HR function to own some of the key organisational processes, such as performance, talent, change and branding.

However, in the light of the global economic crisis, we’ve come to realise that something must have been missing for things to have gone awry. Instead of helping create and sustain long-term performance, reward was focused on helping deliver short-term strategies. Instead of focusing on value and on what really makes a difference, reward concentrated on volume and doing more with less and doing it a lot faster. Rather than being business focused, perhaps reward had become business blinkered.

I believe that the future of reward will not only consist of helping organisations become resilient but also be agile, so not only can they adapt to events but also help take advantage of them and shape them. The ability of reward to do this will depend on their insights into the business, its contexts and the organisation. I believe that reward is well positioned in this new insight-driven environment, but I also have two concerns.

The first concern is how reward professionals can develop an transformational insight into their organisation. How can they know how things really happen and who are the key decision makers and opinion formers are at all levels if they spend fewer than a couple of years working for their employer.

The second concern is how reward professionals use the data that they generate. It is important to use this information to build business and organisational insight. However, while insight into what happens and why is important, so too is foresight and what could happen and what the consequences and opportunities could be. Otherwise, the danger is that HR insight without foresight could leave you just with the benefit of hindsight.