Positioning Rewardfor the Future

Jon Ingham

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Agenda

• Changes to date

• Current needs for further innovation

• New opportunities for the future

• Daring to be different!

Changes to date

• Broadening out from compensation into total rewards, especially with extended, innovated and flexible benefits

• Implementation of ‘the new pay’ with increased use and weight of variable reward

• More global perspective within an integrated approach to talent management, supported by better technology and analytics

Total rewards

Source: World at Work

The new pay

• Team based pay

• Skills based pay

• Competency based pay

• Variable pay

• Non-financial recognition

• Flexible benefits

• Market based pay

Reasons for restrained level of innovation

• Complexity in meeting reward objectives

• Need to bring existing employees along with changes

• General expectations in the job market

• Risk of getting it wrong

• General risk aversion

The new new pay?

• In many cases New Pay systems consume or destroy more value than they create

• New Pay systems often do not succeed because there are unavoidable barriers to strategic alignment

• Difficult to get right and easy to get wrong, it is time for a new, New Pay

Changes to date - Discussion

• What innovation have you implemented in your reward practice?

• Where do you see major opportunities for further transformation?

• Do you think Reward functions have been sufficiently innovative?, and if not, what can be done to increase openness to innovation in the future?

Current needs for further innovation

• Government policies

• Growing concerns

• New demands

• HR changes

Research, including neuroscience and behavioural economics

• Reward reduces performance particularly where creativity is required

• Useful role for prosocial rewards

• Importance of growth mindset

• Self determination theory: autonomy, relatedness, mastery, purpose

HR changes

Recruitment

Learning

CommunicationPerformance

Reward

Abolishing performance reviews / ratings

Source: NeuroLeadership Institute

Current needs - Discussion

• How are these forces affecting your companies?

• What actions are you taking in response?

• If you have or are planning to abolish performance reviews / ratings what are you using to inform reward?

New opportunities for the future

• Optimising current approaches

• Pay transparency and differentials

• Team based reward

• Broader use of technology

• Increased use of data

• Greater use of analytics

Optimising current approaches

• Personalising reward

• Communicating approach and value of reward

• Enabling managers to make pay decisions more flexibly

• Informing vs just supporting financial budgets

Pay transparency and differentials

• Data is already available (Glassdoor ‘Know Your Worth’, Linkedin salary tool etc)

• Enabler for pay equality but issue for pay differentials

Team based reward

• Need for equitable vs just equal reward

• Avoiding social loafing

– Paying teams for the performance of individual team members

– Paying individuals for their contribution to the team

Broader use of technology

• Social recognition

• Virtual currencies

• Gamification

Increased use of data

• Crowdsourcing inputs on performance

• Using data provided by technology including internet of things / wearables (quantified self / quantified organisation) etc

Better use of analytics

• Generating insight to inform decision making

• Running simulations

New opportunities - Discussion

• Which of these or other changes offer the greatest opportunity for improvement?

• What steps need taking to introduce these innovations?

• Is your technology helping progress or holding you back?

Daring to be different!

Business objectives

CompensationBenefitsWork LifeRecognition

Organisational context

Human capital

Social capital

Employee and candidate expectations

Experiment!

Why are companies so much more innovative when it comes to jiggering with their balance sheet or product line than human resources?It is a question that is dumbfounding Dan Ariely, and he told me that companies were loath to try out anything new on their employees. “There is no worse place to try to do experiments than human resources,” he said. “The first thing on their mind when they hear the word ‘experiment’ is lawsuits.”

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