Peter Reilly: Should reward be personalised?
So much in the modern world is about choice and personalisation. These were goals in the NHS and local government before the money started to run out, and they remain the avowed aim of many business service providers, even if at times this is an illusion.
In reality people get the standard product, just nicely wrapped. My new MS Windows 10 operating system tries hard to suggest that it can be adapted to my needs, offering assistance from a series of pop ups, such as ‘I’m Cortona. Ask me anything’, and tempting me to ask the impossible – allowing me to work without helpful interruption.
How has the world of reward responded?
Until the recession there was a move to personalise reward. In my 2005 report New Reward, I quoted Ed Lawler’s 1990 book, Strategic Pay, to the effect that “a corporate reward strategy should be distinctive to that organisation, not a vanilla, me-too flavour that provides no competitive advantage”.
There was still a tendency to move in sectoral convoys when organisations were managing change, as Arrowsmith and Sisson pointed out in their 1999 paper, ‘Pay and working time: towards organisation-based systems’. But the ships were moving towards the personalisation port.
There were organisations pushing the boat out and trying something new, such as a wider range of benefits to choose from or a snazzy online portal to manage options.
In base pay management, there was a lot of discussion about ‘segmentation’ inspired by the insights that came from the total reward perspective. This showed that different employee groups (by grade, occupation, age, gender, and so on) want different things out of their employment experience: older workers might focus on pensions, young professionals on CV building and low-paid female staff on working hours and location.
The risk that segmentation might lead to stereotyping and the fact that within these categories of staff there were further variations (those with children compared with those without; those with short service versus those with long service, and so on) suggested that real personalisation had its attractions – even if they would be a challenge to deliver.
Scuppered by the recession
When the recession came, we entered a new world of cost saving where the fripperies of personalisation seemed out of place. There was little money in the reward budget, and an urge to simplify and standardise to reduce expenditure.
Moreover, apart for some specialist jobs, it was an employer’s labour market such that little effort was needed to lure people into jobs through a sexy employee value proposition and then keep them there.
We may still be in choppy economic waters but if we do want a distinctive offering then maybe a refreshed look at personalisation would be worthwhile and is indeed something organisations seem to be considering.
This is not just because we should have moved away from a paternalistic management style that decides what is best for employees to one where we want employees to take greater personal responsibility, but because certainly for knowledge-intensive and customer-facing businesses we need to create cultures where staff can exercise their discretion to facilitate innovation or for the benefit of the client. Empowerment is back!
What will personalised reward entail beyond traditional flexible benefits or salary sacrifice schemes?
- Giving staff a pay budget to spend as they wish that might include not just the usual benefits but also base pay and bonus.
- Extending the above budget (or creating another) to include learning opportunities.
- Giving staff choice of when they draw down money from a budget, for example by using a debit card-type facility.
- Adapting performance pay to be delivered on the basis of accumulated points, Air Miles style. This is particularly effective as a recognition rather than incentive tool because it permits customers and colleagues to award points.
- Then allowing staff a wide range of ways to spend their money and time.
- Simply personalising the delivery of a reward – for example, handwriting a note of thanks rather than issuing a pro forma thank you.
- Allowing staff to trade work time for caring or for charitable/community activities.
These ideas may not be new but would be more distinctive when put together in a new package that hands over more responsibility to employees to shape their own employment deal: empowerment at work. This could then be communicated bottom up from personal experience (through viral media, perhaps?) rather than through uniform, corporate messaging.
More radically, organisations could segment their offers on the basis of distinguishing between key skill groups (those difficult to attract and with high business impact) from others; or between the different types of employee engagement – high discretionary effort roles compared with those with routine functions. The key skilled and engagement staff would then be given more personalisation options than the rest.
Whichever precise direction employers go in, the tide is certainly with ways of giving at least the most critical employees more control over their work, and that means more control over their reward.
Peter Reilly is principal associate at the Institute of Employment Studies
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