Oracle HCM Cloud

Workplace 2.0:
The Healthy Option

Using the Cloud for Better Recruiting, Retention, and Compliance

V.
What to Pay, to Whom and Why

Workplace fairness is often tested in the field of compensation.

Unfortunately not.

As the nature of work and the way we organise it changes, how do we remunerate our people? The war for talent has swung decisively towards “the talent” – but today’s workplace needs to accommodate those who make a real difference and those who deliver essential hard work.

Both need to be engaged – and compensated appropriately. And with a dispersed, collaborative workforce, management needs to work out how to focus on rewarding outputs (which in turn requires a sophisticated understanding of the actions and behaviours that drive value) – not inputs (such as showing up at your desk on time).

We’ve already seen that salary and benefits are big drivers of engagement. But in our own research, we’ve found that too many people don’t feel they’re getting their fair share.

Rewards are biggest behavioural marker

In Workplace 2.0, transparency is paramount. And that in turn means developing the kind of understanding at management level that co-workers within teams have of performance. For example, if you promote or reward an employee who hits all their deadlines but leaves a mess for other team members to clear up, that creates a problem.

So link rewards to appropriate behaviours; and link those behaviours to organisational performance.

Hierarchical bonuses: Are you rewarding people simply for being more senior? What message does that send about lateral movement?
Perquisites: Are benefits (a company car, say) offered by grade level, role requirements or “by right”?
Pension plans: The old, gold-plated final salary scheme is dead – but enhanced support for retirement planning sends a powerful signal about commitment to employee life outcomes and long-termism.
Performance bonuses: You want to incentivise individual and team performance – but by what yardstick? Sales, cash flow, productivity, customer satisfaction?
Benefits: Health, wellness, financial support – and whether these benefits apply to loved ones. These are very powerful cultural drivers.

Understand workers to reward them.

One of the biggest challenges in compensating talent is that there are diminishing returns to escalating pay. Today’s performance-management systems can generate real insights into who the star performers are. But there comes a point when simply adding more remuneration stops being motivational.

It’s clear that simply increasing everyone’s pay – while it may deliver an effective engagement boost in the short term – isn’t sustainable. Instead, leaders should focus on:

Performance, which in a dispersed workplace and more collaborative business models demands more-sophisticated analytics.
Alignment with employee desires – some might like pay, but for many others, flexibility, benefits, development opportunities or autonomy might be important.
Identify at-risk individuals – which, increasingly, is possible using new tools such as sentiment analysis – and ensure they’re fairly rewarded.
Clarity across the organisation around compensation strategy and available rewards.

Only 41% of people say they are compensated fairly.

A mere 36% say they will be rewarded based on their performance

Oracle