1

The Need for Reward InnovationJon Ingham@joningham

2Introduction

Jon Ingham

• Worked as International HR Director for Ernst & Young / EY

• Also as Director in Human Capital Consulting for Buck

• Now independent consultant, based in UK, working globally

• Interested in people strategy and innovation

• Blogger at 10 year old site – Strategic HCM

• Co-author with Dave Ulrich of ‘Building Better HR Departments’

• Author of ‘The Social Organization’ (available to buy in bookshop)

• Contributor on reward to two ATD books on talent management

@joningham

3Problems with Reward

How likely are employees to recommend your company to a friend based on its rewards package?

What we discovered in Bersin’s first High-Impact Rewards survey is troubling: The NPS of employee rewards, which we calculated from more than 1,100 survey responses, was negative 15 (−15)

@joningham

Source http://blog.bersin.com/prediction-4-companies-will-need-rewards-packages-their-employees-can-love/

4Problems with Reward

Dan Ariely / Stephen Dubner – Value of Social Contracts

@joningham

5Problems with Reward

Lynn Stout - Pay for performance promotes selfishness and reduces prosocial behaviour

@joningham

6Changes in Other Areas of Talent Management

Recruitment

InternalCommunication

Learning &Development

PerformanceManagement

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7Value in Transformation@joningham

8Value in Transformation@joningham

Performance Leadership• Build capability and engagement to create new opportunities for the

business• Discretionary rewards and recognition

Performance Alignment• Ensure each individual is contributing to the business

• Provide bonus or increase challenge in objectives (reflect in size of job / pay)

Performance Administration• Help people deliver in their jobs

• Base pay

Createvalue

Addvalue

Value formoney

Source: http://strategic-hcm.blogspot.co.uk/2008/04/innovation-in-performance-management.html

9Group Based / Peer to Peer Reward@joningham

10Group Based / Peer to Peer Reward

IGN Entertainment has developed an innovative system where it's the employees themselves who help decide how much should go to each worker.

It's called "viral pay.” Twice a year, in January and July, IGN creates a basket of tokens (called "Tokens of Appreciation”). It distributes the tokens among employees and has them give their tokens—which are worth $1 each—to whatever other employees they want.

@joningham

Source http://www.fastcompany.com/1801532/ign-employees-use-viral-pay-system-determine-each-others-bonuses

11A Changed Context

• SMAC technologies• Newer digital systems including talent and contingent worker platforms• Further disruption likely eg Blockchain

• More interest in meaning and self-actualization (not just Gen Y)• Less loyalty but remaining interest in longer tenure if appropriate opportunities can be provided• Pressure on living wage and concern over executive pay

• Increased focus on skills and tasks vs jobs• Greater variety of contractual arrangements• Need for groups of specialists to meet complex and systemic organizational problems• Reducing hierarchy and increased use of teams, communities and networks

• Greater transparency (Glassdoor, Payscale, Linkedin etc) and need for strong employer branding• Possible moves towards Universal Basic Income

@joningham

12Discussion

1. What innovations have you implemented in your reward practice?

2. Where do you see major opportunities for further transformation?

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

@joningham

13The Basis for Innovation@joningham

Strategic objectivesand principles

Divergentthinking

Convergent thinking

Identifyoptions, pros and cons

Implementsolutions

And managetrade-offs

Review & enhance

Business strategy

14Netflix Market Based Reward

Netflix:• Goal is to keep each employee at top of market for that

person• Market compensation always applies and top of market

comp is re-established each year for high performing employees

• At annual compensation review manager has to answer the three tests for he personal market for each of their employees:

• What could person get elsewhere?• What would we pay for replacement?• What would we pay to keep that person if they had a

bigger offer elsewhere?

@joningham

Source: http://jobs.netflix.com/

http://jobs.netflix.com/culture

15Strategic Reward Objectives and Principles

Reward objectives, eg:• Recruit, retain, motivate• Market competitiveness• Level of decision making (hierarchy not going away completely)• Flexibility across roles• Contribution to groups and whole organisation (social talent)• …

Reward principles, eg:• Total Rewards• Intrinsic vs just extrinsic motivation (eg recognition)• Internal and external relativities• …

@joningham

16Potential Reward Activities

• Optimizing current approaches:• Informing vs just supporting financial budgets• Focusing differentiation on top social and critical to retain

talent• Focusing progression on smaller number of meaningful

grade changes (and dual / multiple careers)• Enabling managers to make pay decisions more flexibly• Personalizing reward• Communicating approach and value of reward (“Never

reward without recognition”)

• Pay transparency and reduced differentials• Team / group based reward• More extensive use of technology, data and analytics

@joningham

17Core and Contingent Workforces

Contingent workforce:• Hired per task and paid on task

completion (perhaps on Blockchain?)• Rates often kept low through

competition on a gig working platform, though with some account taken of quality too (perhaps through social recognition measures)

• Works best for tasks which can be separated from other work and described objectively

@joningham

Core, retained workforce:• Focused on more complex activities, requiring

group work and investment in relationships• Social talent = connectors, energizers and

network brokers• Often less easy to measure quantitatively• Even more focused on intrinsic motivators• Group based financial rewards (or individual

rewards that do not impact group working)• Avoiding social loafing• Need for equitable vs just equal reward

18

Horizontal teams Networks

Simple groupings Communities

Task focus,Extrinsic motivation

Human focus,Intrinsic motivation

Internal orientation

Externalorientation

Teams and Other Groups / Networks@joningham

19

Horizontal teams requiring deep collaboration.

Variable pay based on team performance and individual’s contribution

to team

Networks of individuals cooperating with each

other.Funding based on

friendly competition between network

members

Simple groupings ofpeople working largely

individually.Main motivators base

pay and functional progression

Communities cultivating relationships between

members.Investments in things

members are passionate about

Task focus,Extrinsic motivation

Human focus,Intrinsic motivation

Internal orientation

Externalorientation

Group Based Financial Reward@joningham

20Gamification@joningham

Games

Players&

motivesBusinesscontext

Changes inbehavior/ motivation

Game mechanics

21Discussion

1. Which of these or other changes offer the greatest opportunity for improvement or transformation?

2. What steps need taking to introduce these innovations?

@joningham

22Experimentation

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.”

@joningham

Source https://www.ft.com/content/fbe9937a-cffb-11df-bb9e-00144feab49a

23For More Information

Email: jon@joningham.com

About me: joningham.com

About my business: strategic-dynamics.co.uk

People: strategic-hcm.com / strategic-hcm.blogspot.com

Organisation: organization.social

linkedin.com/in/joningham

twitter.com/joningham

Phone: +44 7904 185134

@joningham