Recently, I was preparing for a presentation to a group of HR executives in Latin America. Needing inspiration, I spent a rainy afternoon going through some old books – many of which I haven't read since grad school. In my digging, I ran across an old copy of E.F. Schumacher's, Small is Beautiful, which I first read in an undergrad economics course a long time ago. What stood out to me on this rainy afternoon weren't Schumacher's ideas about creating more humane, manageable, effective organisations and societies. It was simply the book's subtitle: Economics as if people mattered.
Not surprisingly, I found myself thinking not so much about economics but rather something a bit closer to home – pay. Pay as if people mattered. I kind of liked the sound of it.
Perhaps more than any other area of Human Resources, reward management includes a technical body of knowledge in addition to a wide range of "softer" skills. Even though there is plenty of grey area in developing a meaningful reward strategy for your particular organisation, there is a proper way to calculate a salary midpoint or the cost of a new incentive scheme. This more technical side can sometimes leave reward decision-making a bit disconnected from the people that ultimately use and benefit from the programmes we design and deliver. It’s ironic since the questions unpinning reward are often deeply philosophical: What really motivates people? How can you create an environment that fosters creativity? How do you recognize and reward excellence and help those who are lagging behind?
If we were to step back and think about an approach to reward where people mattered, what might we do differently than we do today? Or is our approach to reward management already people-centered enough? Is it possible to design a reward structure that meets the needs of the organisation while still being responsive and flexible to the needs of managers and employees? Can (and should) reward be re-engineered to be more people-centric? I'm really not sure, but research into the differences between high and low performing organisations and high and low performing employees suggests that there is still room for improvement in linking reward back to the most basic element of any organisation - its people.
The annual CIPD Reward Management survey is now live until 11 March, please let us know how your organisation manages reward.
Or, if you're fortunate enough to be a CEO in the banking sector, Pay As If Nobody Matters But You.
While the answers to these questions may depend on the type of organisation, one system of pay that it seems attention is needed most interm of valuing these key resources of any organisation is PRP system. As Deci, 1975 noted, emphasising extrinsic motivation through pay can result in damage to intrinsic motivation.
I don't think there are many organizations that say that their approach to reward management is people-centered enough. Too often HR or senior managers get in the way and want what they think is best, which is a wasted opportunity and generally a waste of money. We absolutely do need to design reward structures that meet the needs of the organisation while still being responsive and flexible to the needs of managers and employees. We really should be finding out what employees value and look to build on this whilst meeting the business needs of the organization.
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