A manager logs onto his compensation management system (sounds a bit like, 'Two managers walk into a bar…', doesn't it?) and selects his team for review.
He can see their current salaries, position in range and current performance rating. He can drill into additional information, such as last salary increase, performance and stock history. There's even a 9-box grid that maps the performance and development potential of each employee.
Despite the readily available information he isn't sure how to reward someone who's a strong performer but already at the top of their grade. Or a mediocre performer with high potential. Or an expert who has maxed out on their potential. Or a solid performer with no apparent potential.
In other words, he isn't sure whether to pay for performance, potential or expertise with his meager 3% budget.
The system makes reward recommendations for each employee but he doesn't agree with several of the recommendations. For example, he doesn't see why someone with high potential should get a higher % increase than someone with ready expertise. Or why a consistently solid performer should be so little appreciated. Or how he's supposed to tell his strident top performer that she's no longer eligible for salary increases.
He sighs and sets to work. He tones down the high potential increases because a generous salary increase seems inappropriate before they've actually done anything to earn it. He channels some of the extra funds to his two solid performers in a fit of man against the machine. He gives his top performer a lump sum rather than a salary increase.
When he's done he reviews the results, frowning: His solid performers got a 1.5% increase each and 'rising stars' got an average of 2%. His top performer received a lump sum to the tune of 3.5%. It feels like a lot of work for not much differentiation.
This manager has already shaken the last cash crumbs out of the chip bag: There's no more money. What else can he do to motivate his team?
Let's imagine he can also drill into a talent profile for each employee where he can review their competencies, personal goals and development interests. He can assign people to projects, career plans or training programs to help develop their skills. Or team up an experienced professional with a rising star.
Not bad but it's still pretty top down and the manager's sphere of influence is limited to his own projects.
So let's take it a step further: Employees can log onto the same system to explore career options, evaluate what it takes to get to the next level and start moving down a chosen path. As they progress, they maintain their own talent profiles for internal recruiting, strategic projects and succession planning. They can connect with available mentors online or review and apply for strategic projects or positions.
The manager is still involved but in a coaching rather than a gate keeping capacity.
How cool would that be?
It isn't even that big of a deal since any modern talent management system can do most of this. Of course, it requires some work, investment and a completely new mindset.
But other than that, what's stopping you?
Laura Schroeder is a Compensation Strategist at Workday, headquartered in Pleasanton, CA. She has nearly fifteen years of experience designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University. Her articles and interviews on HCM topics have been published in the US, Europe and Asia. She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl
Thanks to Compensation Café