Can Rewards and Recognition drive a culture change in the organization?

The short and sweet answer to this question is an absolute yes! Provided the desired behaviors that should be a part of the organizational culture are mapped correctly and rewards and recognition is used to reinforce them.

Let’s take an example – as an organization if you want to create a culture of honesty and hard work, you might want to formally recognize employees who had the option of not being fully honest in the course of their work by taking the easy way out but decided to stay on the right path even if that meant putting in a lot more effort and maybe even a slight delay in achieving their goals.

Another example could be of an organization which wants to discourage employees from staying in office till late either because they are inefficient or they want to impress their superiors. If the organization recognizes employees who are genuinely efficient – they complete their work on time and leave office on time consistently. While it might be hard to rank and stack employees based on their efficiency, there could be a self-nomination process and the claims of the nominees could be easily validated based on feedback from their managers and the attendance system data.

In fact, our view is that rewards and recognition can play a pivotal role in initiating a change in the organization culture.  It is really basic human nature to gravitate towards behaviors than give them the maximum benefits.  Organizations should include behavior or value based recognition in their employee programs in addition to the general outcome based recognition – that’s our recommendation.

Automated Performance Assessment –The Rise of the Machines

April 20, 2018: It’s the Judgement Day today in Sparrow Solutions today – the annual appraisal ratings will be released in the organization today. For most employees, it’s the day when their efforts throughout the year will be recognized and eventually be rewarded through increments, bonuses, and promotions. A few employees fear the worst that they might be asked to leave due to under-performance. Every year the bottom 10% of employees is asked to leave the organization due to poor performance. It’s a tough call but it has to be done. But one wonders why should the organization wait for a whole year to figure that someone is under-performing and corrective action needs to be taken? On the other hand, an employee who is an overachiever needs to wait until the end of the year to be rewarded and given the next level of challenges.

The other big flaw in the system today is that the qualitative assessment of performance leaves a lot of room for biases to creep in. Plus, in most organizations, the HR team and the people managers spend an inordinate amount of time in discussing and debating about the performance ratings. Add to that the time spent in collating and presenting the data. All of this hampers productivity and delays actual action.

In all organizations, there is a big push towards making data-driven decisions even in people matters. The big data approach to performance appraisals could increase efficiency, cut down on the manual effort, reduce bias and the cycle time of performance appraisals. We should be looking at continuous performance assessment and corrective actions.

As employees work in the organization, they leave a trail of data in their everyday work tools be it Project Management System, CRM, ERP, Time and Attendance System, etc. Automated performance management systems of the future will monitor employee performance on a continuous basis, based on the data derived from these systems. These systems will score the employee’s performance based on various parameters linked to business results and suggest corrective actions or even initiate actions itself. Actions could range from playing a motivational video, recommending a training course, connecting with an internal subject matter expert on chat to even recommending a change in job profile of the employee.

The biggest advantage of such systems would be the continuous assessment of employee performance. Corrective actions can be taken immediately, so no need to wait until the appraisal cycle. Be it training, reskilling, role enhancement (read as a promotion) or role change – can be initiated immediately. The system will have predefined thresholds for each action. The system will learn from past experiences of such interventions and their effectiveness, and tweak its algorithm for more effective interventions. The system can also keep track of employee motivation and take corrective action before it starts affecting productivity.

In today’s business environment, every second count. And keeping pace with the business changes is the need of the hour. Hence, such performance measurement and development systems can make employees and organizations more responsive to chances. It will result in higher productivity, greater business impact and higher employee satisfaction. The amount of time spent by the management and HR in the formal appraisal process can be cut down drastically further increasing productivity. Think of start-ups and small companies that are growing rapidly, which need to be extremely responsive to the business environment. But at the same time, they will always be short on HR resources to manage their people and performance. The other advantage is that these systems remove supervisor bias and errors.

While it might take some time before the system can speak out ‘you are promoted’ or ‘you are terminated’ but we are definitely going to see more intelligent learning systems for employee performance management very soon.

Peer Recognition – putting it all together

With the increasing influence of social media in our lives, it has become imperative that corporates give more than a lip service to peer recognition. The earliest form of peer-to –peer recognition is the ‘Thank You’ note that a colleague can pin on to your dashboard. In the digital world, the ‘Thank You’ notes have been replaced by ‘Thank You’ e-Cards.
Peer-to-peer recognition, also known as 360 degree recognition was thought of as a harmless and costless way of motivating employees, till a few progressive organizations started taking this to the next level. They started inviting nominations for awards from peers, not just managers. Practically, anyone in the organization could nominate anyone. However, this started leading to malpractices of ‘I scratch your back, you scratch mine’ or gaming the system. This is precisely the number one reason why most organizations have stayed away from any serious peer-to-peer recognition keeping in mind the philosophy ‘the manager knows best’. Again, a few progressive organizations have taken the lead to bring in manager or HR moderation to remove any such bias. Smart recognition systems might have built-in rules to detect and prevent such ‘games’ and ‘biases’.
Peer recognition or peer based recognition is here to stay because in today’s corporate world, employees work with their colleagues in their own teams or across different teams much more than they work with their own reporting managers. In many cases, employee might work out of remote locations such as client sites or the field. They might not even meet or interact with their managers on a regular basis. So, peers are most often the best source of getting feedback about the employee’s performance on the job and to recognize the same!

Should organizations celebrate employees’ personal milestones?

Mumbai, 3:30pm, an ad agency office: In the large conference room, there is a party going on! Music, snacks, beverages, flowers and a cake! Is it someone’s birthday today? No! It’s Smita’s wedding anniversary! So her team, the HR and her boss are celebrating the occasion. The HR dials Aloke, Smita’s husband and switches on the speaker phone as Smita cuts the cake and her colleagues cheer and clap.
Switch over to Aloke’s office, a multi-national bank. All work and no play! A few colleagues who follow him on social media wished him in the morning but nothing as such happened officially. No party, no celebrations! Just like any other day at office for Aloke.

The question is whether organizations should celebrate employee’s personal milestones? If so, how far should they go? Employee’s birthday, marriage, new born,
wedding anniversary, spouse’s birthday, children’s birthdays? What else?

The simple answer is yes! If it makes the employees happy and does not cost a whole lot to the organization, then it makes absolute sense to do it! It could be a simple group mail, a post on the intranet or official social media, a small inexpensive gift or even a small party. Organizations might want to incorporate these in their employee welfare policies and budgets. HR and Managers might do well to proactively implement the policies. Even without an explicit policy, they can take the initiative to acknowledge such occasions, be it a simple bouquet and card. Such initiatives can go a long way in deepening the bond with the organization and build better bonding within the team. Today when there is so much digitization and automation, a little personal touch is really helpful in improving employee motivation.

Should organizations reward employees for their achievements outside?

Amit works for a leading multinational in Mumbai. He is a big running enthusiast. He runs races in different cities across India and the world. Recently, he successfully completed the Kenyan Ultra Marathon. He posted the pics on Facebook and Instagram, and his friends started liking and commenting on the posts. Several of his office colleagues, who follow him on social media walked up to him and congratulated him. It felt very good!
Amit’s friend Shekhar works in a start-up in Bangalore. He is also a fitness enthusiast but not as big as Amit. Somehow Amit had convinced him to join him for the Kenyan Ultra Marathon. Due to his fitness levels, he did manage to finish the race but he had severe cramps and dehydration after it. The day he re-joined office, he received a hero’s welcome – there was a flash mob, bouquets and gifts from the management; the CEO himself came and congratulated him, the HR invited him to give the entire team a pep talk about fitness which was webcast across the other locations and the video was added to the company intranet. Shekhar was overwhelmed. He started a running club along with his colleagues and employees of other organizations around his office also joined in. Amit flies down once a month to Bangalore to coach the club members. They travel across the country to participate in running events.
So, what are we saying here? Should organizations celebrate achievements of employees outside of them? Does it make sense? If so, where should one draw the line?
If one were to jot down the broad categories of external achievements possible, one can come up with a list like this:
• Scholastic achievements like getting a degree or certification
• Sports achievements like winning or participating in a major sporting event
• Artistic achievements like winning a talent hunt or performing in an event
• Social achievements such doing a project for a social cause
• Personal achievements such as getting engaged or married or spouse or children achieving something important
Our view is that as a best practice an organization irrespective of its size or origin should make some attempts to recognize employee achievement outside of its boundaries, even if monetary reward is not possible. Even an email, a mention on the intranet or a newsletter or during a floor meeting might work!
Most organizations might not have explicit policies on this, so it is up to the HR and line management to take the initiative on the same. Yes, there are qualitative calls that they need to take on the level of achievement but it’s not that big a deal. Bottom-line: its worth doing something which makes employee s feel happy and motivated and doesn’t cost the organization a bomb!

by HiFives Team
To know more about best practices of employee rewards and recognition, please visit www.hifives.in

The Future of Employee Rewards: Will be earned but not given

Employee rewards and recognition is still the work of the managers and HR in 90% of organizations much like compensation and benefits. It is yet another task, another chore, another line item in the to-do lists of managers and HR.

Nomenclature varies from organization to organization – Spot Awards, Star Employee, Performance Champion, etc. The process might also vary from one organization to another – manager nominates, functional head or a panel selects the winner, HR communicates to the winning employee, either over email or in a larger forum such as a town hall or a floor meeting. But, the overall concept of employee rewards remains the same across most organizations.

There are a few progressive organizations that believe in the concept of 360 degree recognition and invite nominations from peers and colleagues. In most cases, these nominations need to be scrutinized and accepted by the managers/ HR before it can be released to the employees.

A good number of organizations use some sort of process tools to automate the rewards and recognition based on predefined rules. These tools simply make the processes more efficient and reduce the chances of errors. There is hardly any built–in intelligence in these tools to decide winners based on continuous assessment of employee performance. They just process the requests from managers and communicate to the selected employees.

In the future, as the new generation of employees enter the workforce we have good reason to believe that the rewards and recognition scenario will also undergo a massive transformation. Employees will no longer be ‘given’ rewards by their managers and HR but will ’earn’ the rewards themselves based on their actions and performance. Systems powered by artificial intelligence will automatically assess the performance of employees based on past data and reward employees automatically objectively and fairly without manual intervention. These systems will capture data from all work tools that the employees use such as project management systems, CRM tools, issue trackers, attendance systems, learning management systems, etc. The ‘intelligent’ reward systems will be able to understand the level of challenge under which the employee is performing and the capability of the employee (based on past performance) and reward him or her accordingly.
What this means is that employees who are at higher of performance might get rewarded less for performing the same level of task as those employees who are still performing at a lower level. Of course there could be a different school of thought on that. The HR and the management will still be able to define the rewards framework, the thresholds, the levels and quantum of rewards.
This is what we believe the future of employee rewards will look like. Employees will not have to wait for their managers to reward them but will earn the rewards themselves on the go. As always, there will be progressive organizations who will adopt these concepts earlier than others. Also, a whole new generation of ‘intelligent’ reward systems that will start coming into organizations.

How to use Gamification to boost your employee referral programme

Chantelle Jones
Head of Operations at Scede.io

Introduction
How is your employee referral programme going? For a large number of companies, it’s a struggle.

However, employee referral programmes can be one of the most powerful weapons an internal recruitment or HR department can have.

Here are some of the benefits that show why an employee referral programme is so great:

46% of referred employees are likely to still be in the business after a year, as opposed to 33% of employees that have come from a career site
Employee referrals have the highest applicant to hire conversion rate – only 7% apply, but this accounts for 40% of all hires
67% of employers and recruiters said the recruiting process was shorter, and 51% said it was less expensive to recruit via referrals
So how are businesses like Deloitte, IBM and Freshbooks rocking their employee referral programme and keeping their employees engaged throughout? Although there are many great benefits to employee referral programmes, you’d be surprised at how many companies get it wrong and do not stick with it.

The answer – Gamification.

Gamification
“The application of typical elements of game playing to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service.”

Getting Started:

Before you do anything, you need to get people on board with the idea. At the end of the day, if your employees aren’t bothered about your employee referral programme then you will get very little results.

Create a step by step guide for all employees. This guide will enable you to explain the rules, the game and processes, prizes, your recruitment process and the type of people you look for.

By clearly highlighting each step, you are allowing each employee to master the system and get really involved.

Perhaps give them some basic social recruitment training so they feel confident in the actions they take.

Give Feedback:

In any part of the recruitment life-cycle, feedback is one of the most important parts of the process. This is no different!

Employees won’t ‘play the game’ if they feel that their referral falls into a black hole, never to be seen again. By constantly giving feedback, you are encouraging further action to be taken by each member of your team.

By implementing a points system, each employee can see exactly what they have done and that their action has been recognized.

To keep everyone engaged and encourage everyone to participate, points should be rewarded based on effort.

Here are some ideas to get you started:

Sharing the career site blog, jobs and company culture
Proactively building a network within your industry and competitors
Providing leads on candidates who are looking to move from their present role
Recommending qualified candidates
Candidates who pass interviews
Candidates who are hired

Make it multi-player:

Just like any other game, it’s OK playing on your own, however it’s a lot more fun when you have others joining in too.

Bring out the competitive side of your team and create a leader board that you can share with your entire business.

You could even have a leader board displayed in the office if you are going through major growth.

To ramp up the competition or build on participants (not to mention to expand your network!) you can invite non-employees into your employee referral program. Consider bringing in industry influencers, former employees, business partners and vendors into the game.

They will enjoy being part of something and having the potential to win prizes. Furthermore, you will get a far wider reach of passive candidates.

Make it fun:

Allow more winners.

It’s one of the simplest but yet most powerful pieces of advice I can give for creating a successful employee referral programme.

Think about it. As an employee, you put it in all that effort, the candidate you referred has made it to the last round, and they fall at the last hurdle. What do you get for it?

That’s right, nothing. Not even a pat on the back from your boss. So why bother next time?

There are a lot of things you can do to make your employee referral programme fun for your employees and therefore boost recommendations. I would suggest speaking with your team to find out what they are motivated by.

After all, who knows what they want better than themselves?

In the meantime, here are some ideas to get you started:

Surprise your employees! Don’t be afraid to mix things up a bit. Swap and change the points system, have random raffles for people who have hit a certain points level or even have a power hour where they will get double points for the actions made within a certain time frame
Got a hard to fill role? Offer a special prize for everyone who refers a qualified candidate for that position
Make points redeemable for prizes – this gives your team an element of control (which they will like). You can start off small and inexpensive: scratch cards, vouchers and experience tickets
When people reach a particular status in the leader board they can win a fixed prize. For example, dinner for two when they reach the top 4
Encourage teamwork – have a department or office location competition to create teamwork. You can then give a collective reward to the department that contributes the most qualified candidates

Conclusion
Remember:

Remember: An employee referral programme is not something you launch, it’s something you do. In order for your program to take off, you need to constantly enrol people into the game!

Remember: Your leaders need to get involved too. Like with anything else in the working world, your Hiring Managers need to set a good example – set them monthly goals, or even separate hiring manager competitions to keep them involved.

Remember: Review your leader board often and stay on top everything. People will quickly lose interest if you don’t.

Remember: Constantly acknowledge your staff and give people feedback.

And there you have it, some key advice to help you get your employee referral program working and turning your entire workforce into recruitment superstars!

Before I go:

But before I go, I want to leave you with some ideas of how you can reward your employees. Not every business has the cash reserves for extravagant rewards.

Best reward practices:

Cash rewards
Product awards e.g. Tablets and clothes vouchers
Experience awards e.g. A theatre trip with overnight stay in hotel
Paid vacation or days in lieu
Public recognition

Disruptive New HR Tech That Can Boost Employee Engagement

The modern HR mission has shifted to focus on putting people first and employee engagement has become the yardstick of HR performance. The good news is disruptive HR technologies are redefining HR from recruitment to employee feedback—and finally making strides on boosting engagement.

After years of stagnant employee engagement scores, Gallup recently reported a slight uptick. In the latest 2017 Gallup State of the American Workplace Report,over 33% of the workforce said they felt engaged in 2016. While still low, this reflects a 3% increase from 2012 and the highest engagement number in Gallup’s 15 years of tracking this metric.

What’s driving this uptick? Specifically, Gallup highlighted a notable improvement in three elements of employee engagement: (1) learning, (2) recognition, and (3) feedback.

In particular, startups are spawning new HR technologies that can really help organizations move the needle on employee engagement. What are those disruptive technologies? See The HR Tech Stack Engagement Guide: New Innovations Disrupting HR.

How can you leverage these new technologies to boost engagement at your organization throughout the employee lifecycle?

Hr Engagement chart

1. First impressions count: start on day 1

The very first time you interact with your new employee—from the first recruitment touch to the first day at work—matters when it comes to nurturing strong engagement in your workforce. When companies have excellent recruitment practices, they experience a 300% revenue growth.

New personalized and data-driven recruitment tools can make sure new hires make positive associations with your organization before they even arrive. Structuring and aggregating feedback to review candidates takes the guesswork out and ensures you make unbiased decisions. A recruitment platform everyone loves to use empowers people to engage and help create a winning hiring culture.

2. Deliver new ways to learn and grow

Learning & development is one of the most effective strategies to boost engagement at your organization. Studies by Bersin by Deloitte show that organizations with strong learning cultures result in 30-50% higher engagement and retention rates. 80% of employees feel learning new skills would make them feel more engaged.

Tap into new digital learning tools that offer employees consumer-like experiences with recommendation and review systems, similar to Netflix or Amazon. Machine learning also enables in-depth data analytics on trending topics, what employees are learning, and what they want to learn next—allowing for a more personalized learning experience throughout the employee lifecycle.

With learning & growth opportunities as a recruitment driver for today’s talent, it’s important on day 1 to show your new hire you are committed to their growth and discuss personalized learning paths to reach their career goals. Throughout your employees’ lifecycle, offer continuous opportunities to learn and grow so people remain stimulated. This means giving stretch assignments and encouraging both horizontal and vertical growth at your organization while providing key learning steps to reach and excel in these new roles.

3. Think out of the box on how you recognize employees

It’s well documented that recognizing your employees for the great work they’ve done goes a long way to boosting engagement. According to Bersin by Deloitte,engagement scores improve by 14% when organizations implement meaningful rewards programs. What’s more companies with sophisticated recognition practices are 12x more likely to have strong business outcomes.

Recognize key employee career milestones throughout their lifecycle from day 1 to when they leave. With four diverse generational segments in the workplace, a one-size-fits-most recognition strategy is no longer an option. Consider your employees’ individual needs and motivators, and a platform that covers a wide selection of meaningful reward choices. Know your recognition ROI by investing in a platform that covers a complete feedback loop and ways to measure your rewarded employees against your engagement goals.

Think out of the box when doling out rewards, don’t just give them a gift card or a gift basket. Consider giving experiential rewards like skydiving or cooking classes to make the recognition more special and memorable. For example as part of onboarding, welcoming new hires with experiential employee recognition gifts like urban foodie tours can help new cohorts bond with each other as well as embed them in the larger community.

4. Listen to what your employees have to say

Open and honest two-way communication between employees and management is considered a key driver of high engagement at new tech companies, according to a Culture Amp study. HR’s job is to understand their employees just as marketing must understand their customers. New on-demand employee feedback tools designed and supported by expert psychologists and data scientists allow you to uncover insights easily as well as tailor your feedback program.

Understanding how employees want to be coached and managed or rewarded and recognized can help improve your HR practices and boost employee engagement. Frequent employee pulse surveys and exit interviews when people leave provide rich data on how you can constantly enhance your workplace culture.

New tools to help you boost engagement

The HR industry is experiencing a renaissance with a flood of new and innovative HR tools to help you boost engagement throughout the employee lifecycle—recruitment & onboardingcompensation & benefitslearning & developmentemployee recognition, and employee feedback.

Three key pillars of effective recognition

Recognition is a key component of employee retention, but what are the fundamentals of a successful program? Alan Heyward, Executive Manager, accumulate, provides his insights

Growing numbers of organisations are treating employee recognition as a key pillar of their corporate strategy, recognising its critical role in driving cultural alignment and behavioural change, developing capability, and strengthening engagement and retention.

And it’s those organisations that are applying increasing levels of sophistication to three key areas that are realising some of the most significant gains – those areas being: recognition branding, employee communications and people analytics.

  1. Develop a fun, engaging and meaningful recognition brand

While some organisations simply default to positioning their recognition activities under an extension of their corporate brand, there are plenty of organisations that have invested heavily in developing creative, aspirational and engaging brands with impressive results.

Two of our major banking clients have developed and evolved their Heroes and Legends recognition brands respectively; the former invoking heavy superhero imagery to help recognise the everyday heroes within their organisation. The latter has drawn from mythology, employing a mix of illustrative and photographic imagery to represent the hidden legends within its walls.

Additionally, a large multinational pharmaceutical client has long celebrated a small blue mascot – Charlie – as the face of recognition throughout the company; he has acted as a fun, accessible, unifying element across its highly diverse workforce.

Another example is a large retail client, which uses its playful and, at times, irreverent Seeker brand – complete with seemingly endless amounts of canine imagery and puns – as a vehicle through which to recognise and reward behaviour that supports new business lead generation across its 30,000-strong workforce.

The themes and creative execution may be fun and light-hearted but, in each case, the recognition brand is highly meaningful and has become a powerful lever that organisations can pull to help role model behaviour and effect change, and drive outstanding, measurable results.

  1. Exploit the power of communication and community

It sounds like an obvious point to make, but effective communication – in all its forms – is critical to the success of any employee recognition strategy.

While virtually a hygiene factor in the consumer marketing sphere, most of these organisations are now realising the power of targeted communications to different employee segments. Some target inactive employees who have not recognised a colleague for some time; others present affordable redemption options based on reward points balance.

Many target demographic and geographic segments: blue collar vs white collar, office-based vs remote, fluent English vs ESL, and online vs offline are just some of the variations to consider. Within these segments, A/B testing is also common; variations in subject lines, messaging, imagery and communication dates are trialled, as are the use of control groups, providing the opportunity to further enhance communication insights and effectiveness.

The more progressive organisations also target influential recognition superusers – those who regularly give and receive recognition – and empower them as recognition champions, to help drive the desired cultural change and/or alignment, and use recognition to help build stronger employee communities.

Targeted, educational communications to managers are also common, as is the sharing of personal stories and individual profiles, to celebrate achievement, and role model and reinforce desired behaviours.

The empowerment and strengthening of employee communities via social streams is another critical element of the communication mix, creating an additional layer of engagement by providing a forum for both professional conversations and personal interests.

It’s no coincidence that organisations that provide a host of excuses for communicating infrequently, if at all, have trouble realising a strong return on their recognition investments.

  1. Make data-driven decisions

As I outlined in the Engagement Report in the December HRD issue, growing numbers of organisations are tapping their employee recognition data to produce insights that help optimise the performance and efficacy of their recognition strategies, and inform their broader organisational decision-making.

For example, our Heroes client (from section 1) has analysed its HR data sets to draw a clear, positive correlation between recognition activity and overall engagement.

Our Seeker client chose to overlay a qualitative element by surveying its employees on a range of elements, allowing it to build a strong internal NPS picture, identifying opportunities to improve process and communications, while also helping to shape its overall performance and reward strategy.

Other clients are undertaking internal and external benchmarking, and feeding recognition data insights into their broader talent identification and key influencer initiatives. Some are also looking to match recognition and engagement data with sales and customer data, to create a clear picture of key loyalty drivers at critical stages of both the employee and customer life cycles.

Pulse checks, onboarding surveys and exit interviews provide additional, rich qualitative data sources to mine.

3 HABITS OF HIGHLY EFFECTIVE EMPLOYEE RECOGNITION STRATEGIES

1. Develop a differentiated, fun and meaningful recognition brand to cut through competing corporate branding and communications.

2. Target your communications to different employee segments to drive the desired behaviour. Communicate well, communicate often, via multiple channels. Leveraging the inherent strength of your employee communities is critical to the development of a strong, vibrant, sustainable culture.

3. Exploit the valuable employee data sources at your disposal to produce insights that will help optimise the performance and efficacy of your recognition strategies, and inform broader organisational decision-making.


Where data meets communication and design
There are many factors that contribute to effective retention, but it is those organisations that understand and exploit the powerful relationship between a creative, differentiated recognition brand, targeted communications and rich data insights that will ultimately steal a march on their competition when it comes to engagement, performance and retention.

accumulate, a Qantas Loyalty business, partners with many leading Australian brands to help drive employee engagement and loyalty. Talk to us today to find out more. info@accumulate.com.au

As Work Is Transforming, How Will It Be Rewarded

New skills, Millennials and the gig economy are changing the way workers are paid

By Stephen Miller, CEBSJun 13, 2016

The trend away from traditional full-time employment represents a massive shift in the workplace with profound implications, said Ravin Jesuthasan, managing director and global practice leader at Willis Towers Watson, speaking at the June 2016 Total Rewards Conference in San Diego. The annual event is sponsored by WorldatWork, an association of compensation and benefits professionals.

“We are at the beginning of a fourth industrial revolution,” marked by technological breakthroughs including artificial intelligence, robotics, ubiquitous social media and the interconnectivity of virtual everything, he explained. Then add into this transformative mix nanotechnology, 3D printing, biotechnology, and smart systems that provide guided technology for factories, farms, grids and cities.

This is disrupting industries and impacting jobs,” said Jesuthasan, resulting in:

  • Significant job creation and demand within science, technology, engineering and math (STEM) fields, but also widespread and growing job displacement in other sectors.
  • Heightened labor productivity but also widening skills gaps, revealed by a growing skilled-worker deficit and a low-skilled worker surplus. Many of those lacking in-demand skills are recent college graduates.

The disappearing jobs will greatly outnumber the creation of new positions, he noted, with losses particularly acute in office support/administration and manufacturing/production positions. Gains, however, are being seen in management, business and finance positions, as well as in the STEM-related fields. But even here, “with positions such as software developer, there are decisions about whether these should be full-time internal jobs or contracted out as task-specific outside assignments,” which can result in big savings on cost-to-hire and training expenses, and avoid the future costs of salary growth and employee benefits.

In the future, organizations will become a malleable set of functions, and deciding which ones get done inside the organization will be a key strategic question, Jesuthasan said. One consequence will be fewer employees and more partnerships with independent contractors, along the lines of the Uber/Lyft ride-hailing services “gig economy” model.

As this transition occurs, Jesuthasan noted, employee rewards are shifting “from collective and consistent to increasingly individualized and differentiated, with organizations continually optimizing the cost/value relationship with talent. And HR is tasked with navigating this new landscape.”

Consumer-Driven Total Rewards

“The increased speed at which information, people and goods move is changing the concept of what work is and how and where it gets done,” concurred Tom McMullen, vice president and reward practice leader at Korn Ferry Hay Group.

“Organizations are becoming more proactive in assessing what employees value the most—and the least—in their rewards programs, using employee surveys and focus groups,” he noted. “And they’re cutting back on rewards viewed as having less value.”

“Employee pay preferences matter more than ever when it comes to effective rewards program design,” said Dow Scott, professor of human resources and employment relations at Loyola University, Chicago. Like McMullen, he pointed to the importance of measuring employee reward preferences, “even if it means taking people off the line” to participate in focus groups.

This doesn’t mean catering to employees’ every wish and whim, Scott noted. But tailoring benefits to meet employees’ needs can help attract in-demand talent while increasing engagement and retention.

“Most HR programs in place today were created by Baby Boomers for Baby Boomers,” noted John Bremen, managing director of total rewards for the Americas at Willis Towers Watson. “The total rewards programs of tomorrow will emphasize employee choice. And the good news is that companies already are doing this,” from providing a range of employee-paid (but employer-negotiated) voluntary benefits to expanded health plan options offered through private health care exchanges.

Segmentation, personalization and customization—all terms for tailoring benefits to specific demographic groups, and even down to individual employees—are becoming bywords for how to attract and retain younger workers, several presenters noted.

As for Millennial workers (born 1980-95), who will soon be a majority in the workforce, and Generation Z (born 1996-2010), just now entering the workforce, “If we can provide what they want from work—especially career-growth trajectory—we can earn their commitment and loyalty and increase Millennial tenure to 6-7 years instead of 2-3 years,” said Mel Stark, vice president at Korn Ferry Hay Group.

Younger workers often expect a more-customized rewards package, for instance, where employees are provided a set amount of dollars to choose among benefit offerings, several presenters noted. “Yes, it’s complex, but we have so many more tools now, so that with technology we’re able to do it,” said Lori Wisper, director of rewards, talent and communication at Willis Towers Watson.

But the shift to customization “needs to be explained, otherwise employees will perceive it as a cost-cutting exercise,” cautioned Scott.

Future of Compensation

Stark and McMullen’s predictions about base pay trends, based on Korn Ferry Hay Group research, included the following:

  • Classic base pay systems will remain under stress due to shortages of STEM/skilled employees and a glut of less-skilled workers.
  • Increasingly customizing jobs for individual employees will make it difficult to match these positions with pay survey data.
  • The growing variety of employment relationships will require different pay structures.

In terms of variable pay, they said to expect:

  • A slowdown in the trend of increasing variable pay eligibility and amounts.
  • Emphasis on using variable pay to reward collaboration, such as by increasing team incentives.
  • An increase in the use of spot and peer recognition cash rewards.

Stark also foresees a swing back to concrete, measurable objectives “to make sure pay plans line up with behavior [that] management wants to support and reward.”

“It’s OK to have turnover, as long as it’s the right turnover,” said Elliot Santner, senior director of compensation and benefits at products distributor W.W. Grainger Inc. “We may lose some folks, but it should be the right folks.” That’s why, in an increasingly competitive world, rewards and incentives should be tied to recruiting and maintaining workers who meet your organization’s strategic needs.

At the same time, to attract the talent that organizations need, the importance of fairly rewarding people will increase, said McMullen. The need to ensure that pay is perceived as fair is being driven by:

  • The movement towards greater internal and external transparency in workforce pay, such as on social media websites.
  • Increasing executive pay transparency, including CEO pay ratios at public companies, which must be disclosed starting in 2017.
  • Pay equity legislation.
  • Minimum-wage and living-wage proponents.
  • Lower unemployment (at least for in-demand, skilled positions).

Finally, McMullen pointed to the growing trend of engaging and retaining talent with nonfinancial rewards, including:

  • Supporting employees’ skills growth and professional development.
  • Taking advantage of that growth by creating more flexible and personalized career paths.
  • Communicating a strong value proposition for staying with the employer (total rewards and career development).
  • Communicating a greater sense of purpose and meaning in the work.

“People want to feel connected to something bigger than themselves,” McMullen noted, and this is especially true of younger workers.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.