I might as well start off with a confession: I’m a spreadsheet-loving compensation professional, a job evaluation geek and a sucker for structure. I can marvel about the beauty of a well-designed salary structure and have been known to get excited about merit matrices and salary-to-structure reports.
Now that I’m wandering around in Rewardland as a consultant who previously served in corporate roles, I often count my blessings for having had the opportunity to work with professionals from “the other side” throughout my career. Indeed, working with talent professionals has broadened my horizon, further developed my thinking and generally made me better equipped to contribute as reward professional in today’s environment.
The most telling sign-of-the-times in my chosen profession is the evolution in what probably is the bedrock of our raison-d’être: the grading structure. In the “olden days,” companies would typically focus on job-evaluation and reward structures for control and alignment purposes. Ensuring internal fairness and external competitiveness were key – often primarily used to decide on who was entitled to which car and which roles should be entitled to a long-term incentive.
Nowadays, I’d be hard pressed to even remember the last company that asked for or talked about a grading structure. Instead, HR and reward leaders seek to develop and implement a career framework, and not just because it’s the flavor of the day! Changing expectations of people joining the workforce in combination with the need for flexibility in work content and organization in an ever-faster moving world has effectively ended the traditional, plannable (typically vertical) career path (and maybe even the “job” itself).
When career replaces grade
So, the focus has shifted from reward to talent management and development, from salary grades to career levels, from promotion to growth…
A talent focus, however, requires more than simply replacing/renaming the grading structure to a career framework. Accepting – and even promoting – such flexibility comes with consequences.
- Largely driven by digitization, creative organization structures with novel work organization methods and new talent sourcing approaches are continuously challenging the job landscape – to the extent that in some parts of the business, jobs no longer exist.
- People practices are no longer based on detailed job descriptions. Instead a job architecture and generic role summaries, further specified by skills and competency requirement descriptors, form the new paradigm.
- Collaborators’ increase in responsibility, proficiency, capabilities won’t automatically lead to a promotion – yet both employee and manager will expect to be able to receive/give some form of recognition.
- The midpoint-per-grade, which for so long has served as the North Star in navigating compensation, is no longer a valid guide – so we’ll need a new type of sextant.
In summary: the new people model requires a real integration of reward and talent. Although we’ve been sleeping in the same bed for some time, the separate sleeping bags have been replaced by shared blankets.
Signs of the time
Ratingless performance management – there, I’ve said it. For those of you who’ve been off the planet for the past year or so: this has been one of the trends that seemed to take the market by storm – or at least the agenda of seminars, HR networks and professional publications.
In today’s world, this makes perfect sense. Stop focusing on scores and instead, engage in a qualitative (coaching) conversation between adults. It was inevitable this would follow the move towards career architecture (from granular job evaluation and small career steps to development and growth), agile working methods (with fluid instead of rigid roles and responsibilities) and xyz organization structures. Kill the performance score…
Rethinking the merit review process is another trending topic most of our clients are struggling with (also see my previous blog). The merit matrix – so long the trusted guide for the seemingly objective distribution of merit budgets – now gets blamed for contributing to the lack of differentiation. Combined with low budgets and the reluctance of managers to give “strong” messages, the merit matrix often leads to good performers receiving 0.3% to 0.5% more increase than the average performer … Kill the merit matrix…
It often seems, however, that the one thing most managers hate more than rigid structures and guidelines, is… NO structures and guidelines.
Talented reward and rewarding talent careers
All of this drives towards one inevitable conclusion: Evolutions like the ones described above will require a seamless integration of reward and talent practices from the start, not just as an afterthought, developed in sequence or in silos.
Reward professionals will have to apply their knowledge and understanding of jobs to the organization of work (and processes, skills and competences). Talent professionals will have to further develop methodologies and tools (in addition to continuous training and development) for managers to operate without the structure and rules they all hated – but can’t seem to do without…
Moving towards concepts such as allocation of merit budgets based on “potential” or “competency growth” (instead of performance), promotion-within-the-band (instead of between narrow grades), skill-(growth)-based compensation and social recognition-based plans will require us to think as one.
So here’s a call-out from a talented reward professional to all reward talent professionals out there – let’s stick together!