As we explore the changing nature of the workplace and the workforce and discuss how HR can reorient itself to be more relevant to the business, it makes sense to investigate what HR has been doing and how both the company and the employee are impacted by these activities.

At the top of the list is compensation. Compensation has been a contentious issue for HR – from the complexities and compliance challenges of processing basic payroll to the complications of automating incentive calculations and benchmarking wages and benefits. 

Ironically, I believe recent HR obsessions with automation and external benchmarking have actually created disincenting environments to work in. When HR spends most of its time focusing on the mechanics of allocating average budgets, then managers focus on how to do the ridiculous distributions asked of them (or how they can get around them), and workers end up trying to rig performance review processes instead of actually serving the customer or whatever other business outcome is really desired.

All this gerrymandering means HR has no time for true talent management and/or simply loses sight of what it’s actually like to work inside the company when payroll budgets are perennially strapped or capped. They overlook how a poor employee experience across all HR and support areas above and beyond compensation takes the humanity out of human contributions (and turns what could be motivating into resentment.)

The Oxford Economics Workforce 2020 study reports that employees actually rank competitive compensation and bonuses/merit-based rewards highest in terms of benefits importance, but only 39% of executives say their firms offer competitive compensation. So what exactly has all that allocation and benchmarking effort gotten HR?

Similarly, only 39% of survey respondents say they are satisfied with their job overall. When asked what is most important to job satisfaction, respondents cite meeting income goals and overall career goals.

HR has an opportunity today to get great at “enabling people and ideas.” These are the truly differentiating aspects of workforce contribution today and what executives mean when they say, “our people are our greatest assets.”

In fact, the HfS Power to the People: Practical Perspectives on the Workplace study of nearly 5,000 workers worldwide showed that 22% of workers would flat-out take a job today with another company that offered only similar compensation and 47% would take it depending on the company’s reputation.  

So while compensation is important, it has to be considered in context of overall motivational factors at play in the workplace today. To my mind, this begs the need for a Workforce Support Services HR orientation, one that is enabled by a single business system, which should deliver:

  1. One source of truth: If companies truly want to pay for performance and have employees believe its fair, business data needs to come from the primary operational source and be transparently accessible to managers, not in a separate application crafted exclusively to do performance reviews for HR compliance sake.
  2. More time to talk: With separate and suspect systems in place in most firms today, managers and workers alike spend so much time collecting data and crafting reviews for compliance reasons, they have no time left to have a conversation about performance and what truly drives compensation outcomes. Technology automation should give time back, not take it away.
  3. Comp in many forms: Related to the above, how a company values managers’ time to have role contribution and career discussions, facilitates collaboration on the job to get work done and provide informal feedback, as well as invests in formal development training and tools to keep people relevant is becoming a form of compensation in and of itself today. Workers’ anxiety around lack of relevancy was captured in the Oxford study as well, so offering career development as a benefit can achieve both business productivity and employee professional goals.

Some progressive companies I have spoken to have completely detached the annual performance review, compensation, and development processes and discussions from each other so that they can show employees how they are being “rewarded, remunerated, and recognized” in numerous and separate ways as I like to say, which are all factors in individual people motivation.

A final thought: with the rise of the “sharing” economy, “compensation” can take another form: work itself.  It will not likely be long if not already in the works (pun intended) before someone creates a bartering site that allows people to get work done by offering to do other things for the consumer of the service in return. Yet those firms and professionals that have thought through these issues and have sound business infrastructure in place will be able to value contributions – and commensurate compensation – fairly. 

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