When ‘Work’ is no longer work

Enablers and Inhibitors: Rewards & Recognition

Enabler / Inhibitor — Reward & Recognition Attributes

Definition

The reward system of a company refers to a set of programs/initiatives that reward performance and motivate employees on an individual, team, and/or enterprise ecosystem level. Recognition is an additional avenue to reward an employee or team for reaching a specific goal, exhibiting a key behavior or value, or producing high quality results in the workplace. The goal of employee recognition is to show appreciation for achievements and incentivize an employee or team to continue delivering high performance.

When platforms make rewards transparent, organizations will need to enrich their offerings to attract both internal and external talent to key projects. Pay will need to vary even more widely for different assignments and varying levels of capability and reputation. And in a transparent market pay will be set in a very logical and consistent manner through the market itself. In some areas today’s intransparency allows to cover-up for underlying issues like equal pay.

When each assignment carries its own price tag, the marketplace enables new levels of clarity and flexibility for organizations planning their staffing and budget requirements and for individuals monitoring their workload and income requirements.

Dimensions

The general philosophy of Rewards is usually set at the Enterprise level. Recognition happens predominantly at the team and individual level, although there are instances where a recognition could be bestowed from the Enterprise.

Reward and Recognition encompasses a number of dimensions that should be understood within the company environment:

The philosophy of the company is a key dimension in setting the appropriate reward and recognition structure in order to achieve the desired outcome.

• Is addressing individual and/or generational differences fundamental in designing reward and recognition practices?
• Is individual compensation for performance tied to/influenced by company performance — if so to what extent?
• Should variable pay be the primary differentiator for performance? Should performance be rewarded via bonus or integrated into base pay as a permanent increase?
• Do employees share company growth (performance) equally?

The products and/or services a company offers may influence the number and structure of reward offerings. The range of roles within a company may also influence the structure of the offerings. If the company is relatively homogeneous in what its sells, then the reward structure may be relatively simple in nature.

• Specific differences on items such as bonuses and variable pay programs will be influenced by the above dimensions.
• How a company chooses to structure base salary, address merit increases and promotions/advancements, provide stock, or offer profit sharing will factor into the reward structure.
• The level of flexibility desired in employee mix (i.e. full-time, freelance, part-time) will influence the number of contract structures needed to address the different type of workers.
• Talent availability and whether a certain type of skill or worker will be either scarce or critical to the future may also impact the reward structure and level of variability required.

Reward & Recognition Attributes in an Agile Environment

Many enablers, when combined, significantly contribute to the need for change in the reward and recognition system. For example, how assignment attributes are defined may influence when you get rewarded, and the culture may shape the type of recognition changes and incentives the company desires to encourage.

In an agile-agile environment, companies will move more towards a flexible reward system, requiring:

• More and different reward packages
• Enhanced choice and personalization as ways to both recognize and reward
• Ongoing real-time performance feedback and rewards
• Redesign of reward systems in order to satisfy the needs of the new ecosystem which goes beyond “own employees on own payroll”

If this is done right — aligned to a company’s ecosystem, then an increased maturity in the deal /employee promise, fairness and equality should be visible — driven by transparency and an empowered workforce. Transparency, in this context, refers to numerous things from how open and willing a company is to share the different reward structures to the level of visibility into a person’s recognitions they receive. The key is to ensure that the structure that is in place is socially acceptable.

The benefits for the individual include

• Enhanced choice and personalization with regards to reward and recognition
• Increased transparency — leading to freedom to choose a reward structure that works for a life stage
• Reputation is increased due to a new reward and recognition structure — leads potentially to new assignments and learning opportunities
• Recognition and Reward provided real-time

The benefits for the organization include

• Perception of fairness (driven by transparency) even when all things are not equal
• Access to greater pool of diverse talent and greater flexibility
• Ability to match needs of market (i.e. different work types — freelance, short term contract, open ended contract) with reward system
• Ability to match needs of talent with reward system

What will it take to transition your organization?

It is important for a company to understand where it currently falls and desires to be on a spectrum of levers that impact how reward and recognition will be shaped. Below are a few areas to consider and our view on their evolution’s direction in the agile future state.

Provider refers to whether the reward or recognition is primarily influenced by the manager and/or organization or the team or customer. Depending on the company, where you land on the spectrum may differ between the reward and the recognition approach.

Although it may seem like a subtle difference, Focus examines whether the company places more emphasis on the performance of an individual employee or the value either a team or individual provides to the company.

Visibility signifies how observable the reward and recognition system is — whether employees understand and see the rewards and recognitions other receive or whether they are invisible. One additional aspect of visibility is whether the mechanisms of the reward and recognition system are known by all.

Lastly, Format focuses on the range of reward and recognitions available. For static/similar, there is little variability in how reward and/or recognition is handled, whereas in flexible/unique multiple options are available to fit the scenario.

The Intertwined Nature of Enablers and Inhibitors

Rewards and recognition by themselves, however, do not make an agile environment. Interaction with other enablers and inhibitors is required. How you structure Rewards and Recognition influences and is influenced by these — with differing levels of influence. Below is guide to the relative importance and interaction of both internal and external enablers/inhibitors. A company’s journey and current environment may impact where it wishes to focus to become more agile in its approach to Rewards and Recognition.

• How organization design, culture and environment are viewed and shaped at a corporate level and what senior leadership thinks will influence how flexible a reward and recognition system can be.
• The assignments a person receives in addition to development and learning opportunities can become part of a suite of options in which a company rewards and recognizes its people.
• The role of the manager will still impact a person’s reward and/or recognition for whatever his/her assignment is in the moment — the degree of impact will depend on the company philosophy. For example, the manager or team lead may give input and be influencers but more scope/authority could be put in the hands of the organization setting the pay envelopes — whether that is a compensation team or another team.
• A person’s personal network, in this case team mates, may have more influence on rewards and recognition than they do today. This will be dependent on the flexibility level in the company/culture. It can also be more important for a person to achieve a result with a larger team and be recognized for this via social networks than getting the next promotion. How you’re rewarded and recognized, even with an assignment or development opportunity, can influence a person’s reputation and brand.
• In the new world, the employee life-cycle will evolve, putting more power in the hands of the employee — if a person does not like the reward and recognition, they can go somewhere else. A person’s network will also impact the employee life-cycle to a greater extent in the future.
• Last but not least, the country regulations and laws will influence what a company is allowed to do with reward structures and programs.

Potential Hazards to Guard Against

It is equally important to assess hazards and hinge factors that could disrupt a re-imagined approach to assignment based environments. Here are some key areas for consideration:

Career Models, Work Types & Rewards

Gone are the days of every employee of a company being hired into an open ended role. With the rise of freelance employees, and the need for employees to shift within the company quickly, more work may be set up with a predefined scope and end point. With this comes the potential for a new rewards system aligned to this scope. If a company only implements part of the equation (i.e. new work models but no new rewards model) there is a risk of employees becoming dissatisfied with the rewards and exiting the company.

Flexible Teams

In some business situations, teams will need to form and dissolve in faster and different ways than before. This is another area requiring careful planning of both a recognition and a reward system that will account for the dynamic nature of team work to ensure real-time integration.

Partners

If the company has more joint ventures, partnerships, job exchanges of employees, or other cross-pollination efforts, significant thought will need to be put into whether recognition and rewards structures for these types of situations come into play. Do you want to recognize partners or do you keep the model strictly focused on the contractual obligations outlined for the rewards?

Transformational Trajectory

How could the journey from a stable world into an agile one unfold?

The key states and the related activities are:

Environment

• Analyze and understand the Business and Talent environment (volatility / unpredictability / disruption / scarcity of skills)
• Identify the impact of globalized Talent and Labor Marketplace transparency
• Assess technologies contributions and opportunities: ubiquity of broadband, devices, collaboration applications
• Sense the changing societal values (work-life blurredness, meaningful work, demographic change)

Diagnosis

• Define the strategic impacts on traditional reward and recognition structures
• Set a two horizon technology / digitalization / automation assessment for your architectures and infrastructures as it relates to ability to handle multiple employment contracts, individualized pay structures, recognition platforms, and measurements
• Assess your cultural maturity / savviness
• Establish an early-prototyping environment, doing experimentation, testing, and validation of your hypotheses

Incubation

• Test out 1 to 2 key areas that must evolve to increase flexibility– such as a new employment contract or a new reward or recognition approach
• Develop an integrated communication plan to increase transparency within the company to build trust
• Provide core platform functionalities based on a robust architectural framework (incl. data model / infrastructure / user experience / mobility)
• Partner with regulatory bodies to develop playbooks
• Fuel self-sustainability

Transformation

• Evolve as business needs evolve
• Expand use cases to develop out full range of capabilities
• Set analytics to identify areas for automation
• Showcase business (impact) & talent (employability / autonomy) benefits
• Establish lower barriers to network with external marketplaces
• Turn risks into innovation opportunities

2020+

• Get ready for a nimbler workforce — prepare the culture for onboarding, integration, and off-boarding
• Transition to flexible rewards
• The rise of the professional passport

Questions to Get Started

In an environment where many factors are changing at once, here are a few simple questions to help assess whether Rewards and Recognition is a primary area for a company to focus on or if other enablers and inhibitors must be addressed first..

Agility

How agile is the existing reward and recognition structure at the company? Consider using the spectrum of levers above to understand where the company sits today.

Company Philosophy

Does the company philosophy around rewards and recognition need to change to? Consider this in the context of the business cases described in prior sections. In certain business cases changing the reward and recognition structure may take on a greater sense of urgency than in others.

Culture / Organizational Design

Is the culture and organizational design set up in a way to embrace change in this area?

There are 7 other fundamental factors that will enable or inhibit the transformation… View the entire article here