Learnings from the Compensation Strategies

Learnings from the compensation strategies

• As a CEO, their desired outcomes for the reward programs designed by the HR professionals are to customize the reward programs which will generate direct business results and the high ROI of a reward program.
• One of the reasons CEOs prefer the custom plans is that for most of the organizations which have purchased costly reward solution from consultancy realized that “best practices” do not necessarily fit in to their company context. For instance, CEO would expect this program to assist in performance measurement to reward the employees fairly. However, HR professionals may focus on the fairness instead. So there is a difference in understanding of the reward program, CEOs are more business minded and profit orientated, hence they believe that this program should cater to the business needs which HR professionals should take into consideration while designing the reward program.
• Reward system also has to be a reliable measure to reward and retain talents, also identify the low performers out of the workforce.
• Reward system has to be an integration of employee orientated and business orientated program.
• Although frequent changes of reward program are not in favour of an organization, CEO still feels that keeping the program updated and consistently adjusted it to fulfil the business needs is crucial. In my opinion, alterations of the reward program too frequently may firstly cause operational hassle for the HR department. At the same time, it might also generate confusion among the employees. Secondly, while changes might negatively affect many employees’ self interest which could raise unhappiness and potentially harm the organizational stability. However, the changes are still essential to be enforced to help keeping the business effective in the long run.
• “The CEO of this unnamed company said every employee and organization has a specific ‘‘sell by’’ date after which it will ‘‘spoil’’”. I disagree with the above statement because I feel that although the employees might not be as refreshed, however, consistently bringing new talents to the company will generate a large amount of cost such as training, coaching and a long period of adaption. Secondly, this may possibly erode the organizational culture and identity because employees anticipate their leave only after a few years, so it is not possible for them to practice affective commitment. Alternatively,they could still keep their original employees up-to-date by conducting trainings.
• “Schuster said. ‘‘Don’t pay everyone the same for ‘fairness’ reasons; be ‘fair’ to skilled and high performers,’’. This statement in turn leads me to question how are they going to create the organizational identity by practicing sheer performance- based reward system. For the rather “old” employees who have been with the company for a long time. They might not be able to perform better than those skilled new hirers. In this case, the seniors will then be under paid as compared to the juniors. Should the organization adopt such practices which could create a purely competitive work environment and dissatisfaction among their senior employees.
• Lastly, although the best practices might not fit into the specific organization. It is still relevant to learn from the same industry’s better practices and practice with careful planning and consideration.