One of the more interesting phenomenons of the internet age for me is the concept of communication or just what constitutes communication. As an early baby boomer when I say that I talked with Joe this morning I mean that I was either in Joe’s office or at a minimum on the phone with him. Typically, I have looked Joe in the eye and observed his reaction to my words. Likewise, when I say that I met with Joe I mean that we were in the same room for some period of time where I could also read his body language.
We, the baby-boomers, were preceded by the veterans and followed by generation X and now generation Y, sometimes referred to as the Millenials or more simply the “ME” generation. Each generation was shaped, in part, by the environment in which they matured. There were the latchkey kids, the computer and game-boy kids, and now the ME kids who have also been describe as the “over praised generation.” Each generation developed different values and relationships with the workplace.
The veterans who lived through and served in WW II were conformists, continuing the behaviors they learned in the military. The baby boomers saw the post-war boom and were a very optimistic generation who also valued teamwork. Generation X, the latch-key kids, started the techno savvy boom and typically looked at work a “just a job” that could be easily replaced if the working environment deteriorated. Generation Y, the ME generation, generally speaking is highly independent and determined to get it all.
This ME generation is the generation who have constantly been told how great they are, lavished with praise for the most minor achievement, and given almost every conceivable gadget to keep them placated or satisfied. Is it really necessary for a grade schooler to have an iPod, a PDA, and text messaging camera phone?
A couple of weeks ago The Wall Street Journal published a rather extensive article about this over praised generation and the impact that they are having as they enter the workforce. The article talked about the ME generation as being accustomed to constant praise. No longer is there a student of the week – now there are forty. Ribbons and certificates no longer go only to the winners of the contest; rather they are awarded to everyone who shows up regardless of whether or not they even played the game.
The Wall Street Journal article also describes a new job, that of “Celebration Assistant” whose responsibility it is to throw confetti at some employees, pass out helium balloons to others, and high-five the remaining employees just for showing up on time. No longer is “competent” good enough. Now “outstanding” seems to be the norm, the average, or the least acceptable descriptor of knowledge, skill, or performance. The article also suggests that it is no longer OK to tell an employee that his or her work product is unacceptable; rather it suggests that you say something like “Mary (or John) you are really intelligent and creative and I know that you are capable of better results.”
Today, replying to a text message on a Blackberry may well be considered a “conversation” by the ME generation and a meeting could be a simple visit to a web site or “virtual conference room.” So, the question is how will this impact compensation and what should we, as compensation professionals, do to insure that our pay programs continue to have a positive impact on results and profits?
Quite possibly the first step is to determine what our employees value. I recently was a guest lecturer for a friend’s graduate level class on organizational development. The class was a combination of recent undergraduates and mid-career professionals, all of whom were currently working. I offered The Wall Street Journal article as a starting point for our discussions. After they had a chance to read the article, I polled the class to see how many considered themselves part of the ME generation. Eight, or about a third of the class, identified themselves as such.
It was interesting that several of the eight offered, without instigation on my part, that while they considered themselves part of the ME generation they had been taught at home that they were responsible for their performance and not a victim of society. These individuals believe that their fate at work and in life will be a direct result of the effort and output they generate. Certainly this group will respond differently than those at the company with the Celebration Manager.
The next step in identifying their value system might be focus groups or an in-depth analysis of the results of your 360 degree performance appraisals. What have your newest employees said about their supervisor or fellow employees? I think we are all too familiar with the critique of the first line supervisor that includes a comment like “why won’t s/he tell me how I am doing?” or some similar statement that indicates that more honest feedback is desired.
Another possibility might be to conduct a survey of all employees to answer the question “what do you think of our compensation program?” This would have to be specific and focused or we will get the predictable response “it’s too little too late” or something similar. Historically, when asked a general question about pay the response has always been “we need more.”
The next step is analysis – how well does your current compensation plan match the preferences of your employees? It seems to me that over the past years our compensation plans have taken a back seat to progress and have, in many cases, become an ineffective band-aid in our quiver of potential performance motivators.
Historically for the past ten or so years our merit increase budgets have been hovering around the 3% level. This has led to some significant issues, for example how do you differentiate between the outstanding performer and the employee who “is just good enough not to fire” and still maintain your average increase pool at 3%? Possibly you can give that outstanding performer 2 or 3% more than that individual you are not going to fire but is that motivational for either person – I don’t think so. The marginal performer gets upset because their raise was so small and the outstanding performer looks at you and says “I work my tail off and I only get this little bit more than someone who you are close to firing – maybe I should just do the minimum too.”
In one worse case scenario a non-exempt employee was given her 3% merit increase which in turn moved her salary to the next higher tax bracket that in turn resulted in a reduction of her take-home pay. How would you like that kind of merit increase? How often have you overheard the water cooler conversation that went something like this – “if that is all they think I am worth they can just keep their increase” or “look at the bonuses those executives are getting and then look at how little we get” or “yeah, we do all the work and they (the executives) take all the rewards.”
Is it time for personalized compensation? Possibly so. What would we have to do to develop and implement a compensation system that rewards individual performance and delivers that reward in the most effective manner given that employee’s preferred culture and style?
There are issues, but with the computer power that Intel, Microsoft, and others have given us I think the development of a personalized compensation plan is possible and worthy of consideration and investigation. It will take planning, employee and supervisor training, and consistent monitoring but if you agree with the fact that companies with “engaged” employees significantly outperform their peers, then I believe it is not only worth the effort, but also something that every compensation professional should espouse if s/he wants to take their place in the boardroom.
We have flexible benefit programs called “cafeteria plans” and many companies have eliminated holiday and vacation schedules in favor of Paid-Time-Off (PTO) Plans – what about a flexible compensation plan – what about “Cafeteria Cash”SM? We can establish a pool of money for each individual employee and then let that person decide how, and when, s/he receives it. For example, we might let the employee choose the standard merit increase that is added to base salary – or a lump sum payment that is not added to the individuals base rate, but may provide enough cash so that the employee can buy something they really want – or some extra time off – or a specific training class or educational offering – or a paid parking space – or something else that is really important to that employee. Should we build in a deferral or carry over option that would allow the employee to combine last years merit with this years to do something really special? The limit per employee would be the maximum of his or her individual merit increase amount so we would still have control of the overall budget impact.
In the past, it would probably have been argued that “those employees aren’t smart enough to know what is best for them and therefore we, the all knowing managers, must decide how to administer their pay for them.” Today we are graduating more and more individuals from colleges and post secondary programs, so is it reasonable to think that they might be able to decide what is best for them and their pay system at this specific point in time.
Is this a valid concept or is it at least worthy of consideration and investigation – I believe it is if we really want to maximize our employees and subsequently our profit results. Will you be the first to adopt Cafeteria CashSM to maximize your business?
