Meaningfulness is a key theme that has come out of recent analysis we’ve done on incentives and their impact on employee behavior. Many organizations put tremendous resources—from complex performance management systems to detailed pay guidance provided to managers—into ensuring that fine-grained differences in employee performance are reflected in differentiated rewards on the back end. But what we’ve found across different employee populations (sales and non-sales, junior and senior), in different parts of the world, and across different compensation and reward vehicles, is that fine-grained distinctions simply don’t matter. To encourage employees to make outsized contributions to their organizations, rewards must, most of all, be meaningful.
Three examples illustrate the importance of this theme:
The first is about differentiation. When we analyzed the impact of differentiation on employee performance, we found that small differences had little effect. Take bonus payouts as an example: Bonus payouts for high performers need to be at least 50 percent greater than the payout for the average employee to have any meaningful impact on employee behaviors. Anything less than that simply isn’t perceived as meaningful by the recipient.
On Monday, the Department of Labor sent its proposed new overtime rule to the White House Office of Management and Budget for review, the last step before the final rule is made public. According to Politico, this move came sooner than expected and means that the regulation, which proposes raising the salary limit for who is eligible for overtime pay from $23,660 per year to $50,400, could be finalized as early as next month. Politico’s labor and employment reporters surmise that the Labor Department is looking to make sure President Obama has time left in office to veto any potential resolution of disapproval from Congress. Setting aside the legitimate question of whether a rules change of this magnitude will survive the upcoming presidential election, it looks like employers will have less time to prepare for this major shift than many anticipated.
The broad outline of the change is fairly well known: While the exact numbers might change in the final draft, it’s expected that there will be a significant increase in the minimum pay threshold necessary to be considered exempt from overtime rules, and therefore that millions of American workers will become newly categorized by the government and their employers as hourly workers, eligible for overtime pay for any work they do over 40 hours per week.
The change is leaving companies scrambling not just to understand, but also to mitigate the potential financial implications of the changes. In this process, HR is in the hot seat, and will have to answer some not-so-simple questions from both management and employees:
What do you mean you don’t know how much this is going to cost?
You don't have to pretend to be cool, either. (Dean Drobot/Shutterstock.com)
Late last year, General Electric launched a recruiting commercial on late-night TV aimed squarely at attracting Millennial tech talent. The spot shows a 20-something programmer who just landed a job at GE explaining to his clearly confused friends how, contrary to their expectations, it’s actually a cool gig. The message it conveys is that young, smart, tech-oriented talent should consider GE for employment (not just Bay Area startups).
The ad plays into a larger challenge felt by thousands of companies that don’t look anything like GE: how to convince highly in-demand STEM talent that they can forge exciting, compelling careers at an organization that might otherwise elicit only yawns among this cohort, if any reaction at all. If you think it’s difficult for a $150 billion company with a global footprint and an extraordinarily well-known brand like GE to convince smart, young techies it should be worthy of their attention, imagine how hard this is for the small Midwest-based insurance company that needs programmers to design a user interface for its new customer app. The message I hear over and over from recruiters at companies like these is: How can we ever hope to compete with Microsoft and Google for the talent we need? It may be cold comfort for HR professionals struggling with this challenge to know that GE is, in some respects, in the same boat as they are. But there are some strategies organizations are putting in place that can help.
In its annual Candidate Behavior Study, CareerBuilder finds that “3 in 4 (75 percent) of full-time employees are either open to or actively searching for new job opportunities”:
The average job seeker is more empowered than ever before – from a growing economy to advances in technology that make searching for new careers fast and easy.
In the past, CareerBuilder and other industry thought leaders would distinguish between “active” and “passive” job seekers – those who are committed to finding a new job and others who are simply browsing to keep an eye on the opportunities available, respectively. With an overwhelming number of employed candidates open to new opportunities, the days of making this distinction may be over.
Technological changes are indeed blurring the distinction between active and passive job seekers. Data we’ve collected at CEB shows that in less than five years, the number of employees regularly keeping their online professional profiles up to date has risen by 10 percentage points. Today, about a quarter of all employed individuals actively maintain a professional online presence.
There is an important and ongoing dialogue about workplace bias, its causes and consequences, and the most effective ways to combat it. When we participate in that conversation, the better part of our nature is often revealed: We want nothing less than to figure out ways to reduce or even eliminate bias among the otherwise good people we work with. Sometimes, however, we are too quick to shut down potential solutions just because they stop short of those lofty goals.
Take this recent article by Laura Allner at Personnel Today, about initiatives in the UK to create “name-blind” application processes for university hiring in an attempt to combat unconscious bias among recruiters. The idea is that by forcing recruiters to evaluate resumes without the details that could help them guess the race or ethnicity of the applicant, it will be harder for those recruiters to discriminate. Allner dismisses the value of name-blind CVs, because unconscious bias is still likely to creep in at other stages of the process, especially interviews:
Without going so far as to introduce “blind” interviews, with voice distortion technology, it is unclear how effective name-blinding will be in reducing discrimination in recruitment.
There is plenty of evidence that workplace bias exists, and that it hurts women and minorities in many ways, including several large-scale studies showing discrimination in the job application process. And of course it’s important to recognize that name-blind application processes and efforts like them (including name-blind assessments for HIPO and other internal employee programs), don’t actually reduce unconscious bias. They just try to get around it by not allowing existing bias to get in the way of decision-making.
Recently, there has been a string of news stories about organizations trying, in one way or another, to improve the work-life balance situation for their employees. Many follow a predictable pattern: Companies identify a specific problem (attrition rates are much higher for new mothers, families with two working parents are particularly stressed for time, employees aren’t taking enough time off work, employee work is cutting into personal time) and create or modify programs to tackle that problem. Who could argue against this approach?
Unfortunately for those seeking simple solutions, the fact is that work-life balance means very different things for different people. The new hire who wants time in the early evening for a GRE prep class, the new mother just returned from maternity leave who struggles balancing work time with baby time, the older employee who needs flexibility during the day to take an elderly parent to appointments, the stressed executive who is taking calls from the beach… these are all examples of employees struggling with work-life balance, but they all present unique sets of problems to the employee and their employer.