Commit for Compensation!
COMMITMENT of employees is a critical factor of corporate success today. Work environments must make employees feel totally involved and connected with goals and objectives of the organisation. Creating the right environment to attract, motivate and retain human capital has become crucial. Retention is a significant business imperative. And compensation is an essential element of any retention strategy since it is an undeniably powerful driving force for the commitment that is essential.
In times when people switch jobs with shallow unconcern, commitment is used to describe the intention of an employee to stay with the same employer. Research shows that almost half the working force across industries is dissatisfied with their compensation - rewards, and cultural environment. They are also unhappy with the `pay for performance' model preferred by several organisations.
Certain fundamental truths are apparent in compensation. Firstly, employees must believe that the income earned is in proportion to their effort. They should also be convinced that the compensation (salary, benefits, incentives et al) offered by their employer matches the market price in the same sectoral environments.
With these absent an employee is likely to be dissatisfied with his compensation. Managements must establish progressive solutions for the contentious issue of compensation. `Pay for Performance' has been around for over a decade now. Though it is undoubtedly a balanced and realistic practice, the results are inconsistent. This could be because some beneficiaries find themselves too pressured to perform, and would not like their income to be dependent of their performance. The anxiety causes them to under-perform and they very soon leave for less exacting environments. This often creates more problems than it solves. A modified application of this practice could be to reward performance with additional benefits rather than penalise employees for under-performance. Stock option offers and graded training for poor performers, besides significantly higher packages for high-performers could well be a workable solution.
Managements must modify their view of regarding compensation as mere expenditure but consider it an investment in human resources. For a start they could make accurate assessments of compensations being offered across their industry through surveys or through their personal network. To be a preferred employer, a properly designed rewards system coupled with compensation packages pegged a little above the norm in their industry will make a significant contribution. However any action in this area must be accompanied with detailed communication so that employees are aware of what they can expect and what they can do to achieve the best benefit for their efforts. In the case of stock options for instance, the prospect failed in several companies only because employees were not aware of the full implications of a lock-in period and expected instant wealth, which, when it was not forthcoming, translated itself into a loss in productivity.
Satisfaction with compensation is unquestionably the prime motivating factor for commitment though it is not the only one. Companies must therefore plan more comprehensive packages. A compensation that does justice to the potential of the employees is bound to satisfy and encourage a higher sense of commitment.
P.P.SHARPE
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