Rearchitecting variable pay. The future of the annual bonus. Rethinking total rewards. Heady topics that are dominating discussion in HR leadership circles.
In Part 2 of our Q&A with Josh Bersin, founder of Bersin™ by Deloitte and one of the world’s leading HR and workplace analysts, we talk about how crowdsourced feedback can provide a foundation for core people analytics that could uncover retention risks and low engagement. Josh believes tools will emerge that can help improve managers’ listening and coaching capabilities.
Catch up on part 1 here and read part 2 of his Q&A below:
Globoforce: Do you see a future where crowdsourced feedback translates into a modern variable pay model, perhaps replacing or augmenting the annual bonus?
Josh: Yes, while it’s early, we’re starting to see movement. Most companies still do performance appraisals with a rating of some kind, but we are seeing companies incorporating social peer reviews as part of the ratings process to get a more comprehensive view. And I believe this ‘social feedback’ or ‘peer feedback’ is immensely valuable today because it speaks to the issue of your reputation at work and your willingness to help others. People should be rewarded for their contribution to others, not only for hitting their own targets.
However, in the end, when it comes to paying people, companies are still way too traditional. Almost 80 percent of the companies we recently surveyed still pay people once per year and it is almost always based on pay band and annual review.
Globoforce: Does crowdsourced feedback – captured digitally – help companies identify employee disengagement and flight risks?
Josh: Absolutely. There are tools that collect commentary that people are making about different parts of the workforce and the business. These tools can quickly spot retention risks or groups that seem to have low levels of engagement. I just saw an analytics tool that shows each company team on a red, yellow, green dashboard showing how well that team is engaged. These types of tools build on the crowdsourced feedback systems we’re putting in place and can quickly point out when a leader is being too hard on his or her people, when a team is under stress, or when unethical or illegal behavior is taking place.
Globoforce: Can this kind of digital dialog help uncover unconscious bias, perhaps among ethnicity, gender, and age groups?
Josh: Definitely. If your organization can create a culture of trust – where people speak up about what’s bothering them – these issues will come up in the feedback system. And once you start sorting by gender, age, and other factors, you suddenly have tremendously valuable insights on how different groups in your company feel. For instance, in the case of social recognition, what if you find that women receive more social recognition than men? Or vice-versa? That kind of statistic is worth investigating.
Globoforce: What is the future of human applications – that is, people-centric software that emphasizes and amplifies connectivity?
Josh: This is a big issue we have to take on – making workplace technology more human and positive. Right now, we have lots of tools to connect and send messages to each other, but do they create relationships? They do if you use them a lot, but they aren’t designed that way. I believe one of the big applications of AI (artificial intelligence) will be to give employees and managers ‘hints’ and ‘nudges’ that help them become better listeners, better coaches, and better managers. I know of three vendors that sell sentiment analysis and coaching tools all based on the sentiment of comments. As these tools become more trusted, I think they’ll become as common as the spell-checkers we have today.
Another important part of this is organizational network analysis. What if we find an individual who nobody is communicating with? We want to facilitate teamwork in the company, so this kind of data will help us understand why someone may feel left out and what we can do to repair that part of the team.
Globoforce: With fierce competition for top talent, is this an impetus for HR to modernize retention strategies, perhaps through rearchitecting pay?
Josh: Absolutely. In our most recent research we found that companies that review pay more frequently and have what we call a more holistic model – e.g., wellbeing, educational, and other benefits are included – for pay are outperforming their peers in employee engagement, retention, and employment brand. While I know most compensation managers want the system to be very fair and systematic, we have to apply much more design thinking and think about pay as a continuous process, just like everything else in business.
I’ll tell you one more story in this area. I recently spent some time with the ADP executives and they told me they discovered that one of the biggest engagement drivers among hourly workers is the frequency of pay. Many people want – and need – to be paid weekly or more often, so ADP and others are building new payroll systems that can pay people in real time (e.g., you finish work today and you get paid that night, with all the taxes and other fees paid). This trend – toward more flexible, agile, and real-time pay – is very consistent with all the other trends in HR, and I think it will become one of the models for the future.
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