‘Whole person’ rewards
Modern performance based pay has a long history stemming back to the era of industrialisation. Annual ratings-based performance management processes appeared in the 1980s, championed by the likes of Jack Welch and GE with their infamous “vitality curve” although more frequently labelled “rank and yank”. This system hinged on the annual performance review, and boiled the employees’ performance down to a number on which they were judged and ranked against peers. A bottom percentage (10% in GE’s case) of under-performers were then exited. Former CEO of Microsoft, Steve Ballmer, implemented “Stack Ranking” (whereby the top performers got bonuses and the bottom lost their jobs). This was described as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. These approaches to performance management reduced cooperation and incentives to work with other top performers (because that talent might beat you to the top of the rankings) and promoted conservative decision-making to avoid falling to the bottom. Now whilst many of these performance management systems have been phased out or modernised, in many instances the foundations of corporate rewards have not.
What individuals value in terms of employee benefits packages has evolved, however most businesses provide the same menu of options year after year—health benefits, MPF (pension) contributions, gym memberships, financial incentives — without eliciting feedback from employees about which ones they like and value the most. HR and reward policies should no longer treat employees as a relatively homogeneous body. Today's workforce is more diverse than ever before, attitudes regarding work are shifting, and employee preferences are shifting. And in the post-COVID-19 world, the rate of change is just accelerating. COVID-19 has significantly altered where and how people are working. With blurring of the lines between work and home, as well as the rise of hybrid working, traditional rewards frameworks are no longer apt. When you combine this transition with a more diverse workforce seeking for more innovative rewards, it's apparent that firms must make changes.
Employers must grasp choice at the person level — that is, from the bottom up, rather than the top down. Instead of providing an abundance of possibilities, the selection of options should represent a knowledge of the possible impact on each individual employee, not just employees in aggregate. Financial incentives remain essential, however career growth, skill-building, mentoring, and wellness are far more than afterthoughts for the majority of individuals. Employers should consider the "whole person", taking into consideration individuals' career and life stages.
