Changing Face of Reward – A Global Perspective was an interesting topic delivered and discussed by The Saudi Investment Bank Senior Human Resources Specialist Chandrasiri Hewapattini, at the Technical Sessions of the recently concluded National HR Conference 2015 organised by IPM Sri Lanka.
Several megatrends are seen to gradually affect the ‘traditional’ working patterns that we have been so used to over our working lives. These megatrends that are affecting the status quo are the emergence of the digital era, technological convergence, the severe environmental crisis, demographic change where the old are starting to outnumber the youth in our workforces, individualization and value pluralism and the megatrend of globalization or globalization 2.0, are transforming the business and corporate organisations the world over. Hence, the need to reassess and realign the thought processes on how to work, assess/evaluate and most importantly how to reward employees in order to continue to get the best from them in a win-win scenario is now a major factor of contention amongst the HR fraternity and including non-HR people managers.
An interesting phenomenon is the integration of Generation Y or those born after 1980, into the workforce. Their culture requires the creation of a new organisational culture that allows them to unleash their full potential. Generation Y are the people who consider being connected is as important as breathing and who considers that the 207th bone in their bodies is the smartphone! As such, a culture which prohibits Face Book at work, strict rules on entry and exit times, strict dress codes, etc., will not be a culture which helps to enhance Generation Y contribution to achieve organisational goals.
“Between 2010 and 2050, the per capita income is forecast to increase 600 percent in China and 500 percent in India, which is an indication that staff costs would indeed skyrocket. Globalization trends making the world a connected and smaller place is an indication that employees can work from anywhere in the world and the sourcing for talent will be a global rather than a local search and both local as well as global companies having to compete for talent in an era where human resources will continue to play a crucial role in the success of organisations or otherwise,” said Hewapattini.
The digital era calls for a high degree of transparency in pay practices as sensitive information could easily end up in the public domain. This could only be achieved through a robust performance management system which rationally explains the reasons for pay differentiation. Stakeholders too are demanding greater disclosure on executive pay.
“The concept of reward in terms of employee compensation then will have to take into account the impact of these megatrends on traditional remuneration patterns and boundaries in this new era. The new need and drive towards transparency in pay and rewards, assessing and linking rewards - especially senior executive compensation to merit and publicly available data on company performance, ensuring bonus schemes are open and transparent and developing long-term compensation and incentive plans that are consistent with the organisational goals and risks,” he added.
The changing face of rewards is not a factor that will “switch on” on a particular day but is a phenomenon taking place in organisations over a period of time and will be evident in the years to come. Organisations who fail or are late in to recognize and address the implications of the megatrends on the compensation and remuneration landscape will have a hard time competing for and retaining talent in order to achieve their organisational goals. Now is a good time to reassess each organisation’s compensation and rewards plan.
