Professional experts and viewing rewards as investment

Professional expert shall be a Broad Humanist. We hear a great deal today about the need for social responsibility on the part of the professional expert, a great deal about the need for his becoming a ‘broad humanist’ rather than a ‘narrow specialists’. Since more and more of the professionals in our society are working within a business enterprises and becoming effective in and through it, the professional will increasingly have to discharge is social responsibility through his contribution to the business enterprise, will have to acquire his broad humanism by understanding his place in the social structure of the business enterprise and his relationships to its objectives, its performance and its organization.

The proper management of professional employees is among the most difficult facing the business enterprise. It cannot be side steeped by asserting that the professional employee is part of management. Nor would it be solved, as traditional Socialists doctrine asserted by considering the professional just a species of skilled worker and a fellow proletarian. Managing the professional employee requires recognition that he is distinct. He must have the managerial vision; but his primary function is not to manage. He is a worker; but he must determine his own work, asset his own standards, have financial incentives and promotional opportunities equal to (though separate from) those of the manager. A great deal of inquiry and experimentation is still needed to teach us how to solve the problem. But in its main outlines the problems as well as the solutions are visible already. And in solving it the enterprise will not only solve one of its own most important problems; it will contribute to the solution of one of the central problems of modern society.

A number of companies choose to focus on obtaining a good satisfaction score from their stakeholders, on their rewards programs. Companies that do this well, focus initially on aligning their rewards program with their values and philosophy while also monitoring the employee pulse.

One such company, a leading software player, chooses to have a rewards package that is so performance driven that they position guaranteed cash at the 50th percentile, and the rest falls under a variable pay program. Achieving this alignment, though, is not always easy.

Companies that have built huge workforces of loyal employees often face the classic questions: “How can we differentiate for performance and remain equitable? Do we even want to differentiate for performance?”

These companies then tilt towards using analytical tools like conjoint analysis to understand the various rewards tradeoffs that employees prefer. Some of them, having found that all categories of employees are open to performance-based pay, have designed their rewards accordingly.

But, employers cannot restrict themselves to only two parameters: their employees’ views and their own. The operating environment certainly plays an important role in the rewards scheme design. Sometimes, tax and accounting laws allow employees to benefit most through cash payments rather than through a variety of allowances and benefits.

Also, employers have to balance what they can afford with the kinds of returns they can expect to see over time, in light of business profitability. Here they can balance their investments by allocating resources to a variety of short-term and long-term incentives, so that they can factor in the level and contribution of employees, the timings of payouts as well as the spread of the return.

In the case of one global IT organization this balance was struck through a clear strategy to allocate a higher variable pay spend to a segment of employees: high performers and business drivers.

When the total reward package goes beyond compensation, and when the design of the package considers the employer, employee, external and cost perspectives, companies can ensure that their rewards package sustains one of the best, least replicable competitive advantages there is: individual talent and commitment.

Valued employees may still leave for “more money”. In other cases, you may want them to leave.

But, either way, if you have cared enough to structure a good reward package, the chances are that they will leave, not with animosity, but as alumni and ambassadors of your employer brand, creating valuable goodwill. Total rewards are about letting people know that you are on their side. This is an approach that will pay you rich dividends, whether they stay or leave.

View rewards as an investment, not a cost:

* Look beyond cash compensation to include benefits, careers, work lifestyles
* Focus on satisfaction scores with total rewards packages
* Align reward strategy with the company philosophy and values
* Use voice-of-employee and related analytics to guide “trade-off” decisions
* Respond to the external environment, while identifying and nurturing what is unique to your company
* Invest in communicating your rewards package to your employees