Compensation: A Crumbling Facade

“ Behind that mask of cold logic, lies a fragile mind, that worries me”, Lord Black-wood to Sherlock Holmes in the rather interesting movie: Sherlock Holmes, set in 18th Century England and shot in sepia tones.

The statement would probably hold true for organizations today, particularly with regard to compensation. The compensation that workers received sky-rocketed between 1990 to 2008 or thereabouts till world economic crisis’s hit us, bursting unsustainable bubbles. But then the damage was done. Real salaries have not seen growth over the last many years and people are necessitated to work harder to be rewarded with a poorer compensation. The fragility is beginning to show behind that artificial mask of well being for many executives, who thought that the party would never end.

In broad terms, what does compensation entail? It is my view that people go to work for many reasons but three most important one’s are:

1. To Have

2. To Know

3. To Be

We want to have larger salaries, get greater perks, receive higher bonus’s and garner bigger benefits.Economic well being and saving for future security is important.

We also would like to grow and develop and learn and progress along career paths that recognizes us and our talents. We would like to compete with the best and be recognized.

Importantly we look for meaning from our lives, in doing work that is meaningful, interesting and very importantly ethical. Work needs to give our life a sense of purpose and a value system that we are comfortable with, else it can turn terribly boring and pointless. Why do we exist?

Unfortunately the last few years has seen organizations lose that sense of balance that is so very important. Calling it a war for talent, organizations indulged in cut throat competition in luring the best brains at stupendous cost in terms of salaries that are probably not sustainable. Organizations created mercenaries that looked only at growth, because more growth meant higher salaries and little attention was paid to the process of development or that of the purpose of life or even value frameworks. The latter two, simply lost the battle to lucre and succumbed. In the gold rush it was forgotten that Compensation Plans are holistic and need to be carefully structured depending on the ethos of an organization and the kind of people that they want to have.

Mercenaries have little loyalty and will jump ship for better compensation. Organizations have been sucked dry and have little idea as to how they are to cope with salary bills that have gone through the roof and retain mercenaries that they have created. The unfortunate tragedy is that strategies can be changed very quickly but attitudes and behaviors cannot. Workers weaned on high salaries, expect even more and have little patience with learning and development, systematic career progression or meaningful work. Descending from the high that money provides is extremely difficult indeed, as organizations are finding out. Many organizations today have given up the chimera of growth and look for sustenance and risk mitigation. The game has changed, even as they gasp for breath in a competitive world.

Skewed compensation systems have created problems for the long haul, that will require massive re-engineering to arrive at packages that are sustainable and holistic and it is important for organizations, particularly start -ups to structure salaries with care, else that fragile mind behind the mask will soon be seen to crack.