There are many reasons why pay-for-performance practices have been challenged by employees, executives and the media in the last two or so years. I used to think they were the same quibbles that nibbled away at performance management in the 1980s and the early 2000s: Manager discomfort, time suck and skepticism towards magical thinking about ratings. I took all of these as necessary evils in the demanding pursuit of productivity — until yesterday when two things changed my mind.
First, I’ve realized that cultural change has altered the context of performance management. Technology is at the root. The question, “What does it mean to be human in the age of intelligent machines?” is beginning to emerge as an issue to be taken seriously, as technology expands its reach beyond database management, production, administration and prediction into every day life. Face it, all of us have recently had to get our heads around not just the idea of, but the experience of, self-driving cars, drone-delivered Fed Ex and so on.
The answer to “what does it mean to be human” is suggested in a recent New York Times Op-Ed article, ” . . . while machines can reliably operate, humans, uniquely, can build deep relationships of trust.” As a result, our existential agency is shifting from Descartes’ “I think, therefore I am” (which we are now happily sharing with computers) to “I care, therefore I am; I hope, therefore, I am; I imagine, therefore I am. I am ethical, therefore I am. I have purpose, therefore I am. I pause and reflect, therefore I am.” Sounds awfully like the Millennial mantra, don’t you think?
I can hear the eternal chorus of change skeptics raise the volume on their “touchy feely” condemnations. Nonetheless, I believe there are practical applications to this new understanding of — among other things — the meaning of work, that employees are hoping we’ll understand sometime soon. They may or may not lead to a revolution in compensation philosophy, but they do call for a very different set of priorities and measures in the pay-for-performance world.
Examples? Let me answer by sharing another important article: Harvard Business Review‘s, “The Problem with Rewarding Individual Performers,” talks about people not Human Resource practices. Hearing issues that HR has wrangled with for years being discussed by a different profession, light bulbs went off in my head.
“Human beings evolved in groups, and most of us still work in groups every day. Our affinity for groups is wired deeply into our basic biology . . . Group identification is one ingredient that can bring strangers together.” (Just think about what we all observed in political life over the last year.)
If employees’ natural preference is to embrace their tribal nature, they derive real satisfaction from successes achieved by groups they belong to and deeply relate to — departmentally, team-wise and company-wide. The need for individual achievement and recognition is on their list, but further down than our HR training has led us to believe.
Yes, HR has expanded group reward opportunities over the last few years, but the incentive experience often feels to employees like HR is handing out juice boxes to people hungry for a meal. And how many companies can claim that their employees really connect with overall company success? In fact, this may be one of the most telling weaknesses of our current approach to pay for performance.
The insights in the HBR article are wise and research-based (some of them arising from a “Group Processes Lab,” if you can believe it). I encourage you to invite your team to read the short article, discuss what it means to them and identify how you can put it to use — the time is ripe for pay-for-performance improvements.
Margaret O’Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career paths and communications at the Café. Her firm, re:Think Consulting, provides services that include market pay information, base salary structures, incentive plan design, career paths and new plan implementation. Margaret is a Board member of the Bay Area Compensation Association (BACA). Earlier, she was a Principal at Willis Towers Watson. Margaret coauthored the popular ebook, Everything You Do (in Compensation) Is Communications, which can be found @ https://gumroad.com/l/everythingiscommunication.
This post originally appeared on Compensation Cafe
Author: Margaret O’Hanlon