How can we compensate our employees effectively nowadays?
23 de September de 2020
23 de September de 2020
Compensating employees adequately for their work has always been one of the most effective strategies for increasing productivity and ensuring a company’s progress. However, the new scenario triggered by the pandemic and the emergence of different variables, such as working from home and the Fourth Industrial Revolution, have forced compensation models to change.
So, what should today’s compensation models be like? What measures can be applied to retain talent and motivate employees to achieve our business goals? The Director of Programs at EAE Business School and Professor of Social Psychology, Javier L. Crespo, discussed this topic in an online conference entitled “Compensation models: Pros and cons” in which he shared his insight into the current context, employees’ preferences and employer branding. Let’s see what he had to say:
“Heraclitus said that no man ever steps in the same river twice, because both the person and the river changes constantly and, on the second encounter, they are no longer the same”.
Dr. Crespo used this metaphor to introduce the conference and start the first section, entitled “All change!”, in which he explained that the labour market is undergoing a large number of changes that are transforming both the way we work and other important factors, such as the life/work balance.
“Who would have imagined that we would all have had to work this long from home?”, “Who would have imagined that everything would change so quickly?” The expert added that this new global scenario is characterized by change and, to understand these changes, we have to take a number of variables into account.
The Fourth Industrial Revolution
The Fourth Industrial Revolution has been triggered by digitization and has involved the mass digital transformation of the professional world, which has determined most of the key changes in terms of jobs, employers and freelancers.
“The First Industrial Revolution was driven by mechanization; The Second Revolution, by electricity; the Third, by computers; and the Fourth, by digitization. This Fourth Revolution that we are now experiencing is the driving force behind trends such as Hybrid Work”, explained Dr. Crespo.
Briefly, Hybrid Work consists of working for a certain amount of time in the office and a certain amount at home. Nowadays, this format has been implemented and adapted by most companies and the approach seems set to be around for a long time to come.
Yet, as Dr. Crespo explained “Hybrid Work has its benefits and drawbacks. On the one hand, achieving a reasonable work/life balance can be complex, especially for employees with young children. Other complications include difficulty in switching off and fatigue caused by a lack of social relations”. On the other hand, the speaker added that “Hybrid Work has helped many companies make savings in terms of offices and has led to a shift from the old view of work towards a new more flexible model”.
The influence of the Fourth Industrial Revolution and Hybrid Work appear to be putting the old office-based work model to the test and laying the groundwork for a new more dynamic model. “Our work culture is heavily office-based, but being in the office is not necessarily synonymous with productivity”.
The collision of these two worlds and their consequences seem to be a key factor in planning new compensation models.
A millennial does not think in the same way as a baby boomer, while someone from Generation Z thinks differently from their counterpart in Generation X. While many people pay them little attention, generations hold a lot of weight in terms of the employee’s vision and, when we are dealing with multigenerational companies, it is essential to take this into consideration, particularly when designing compensation models.
“At a generational level, the value of the work differs greatly, as we can see. As such, the way to compensate for their work also differs. For millennials, it is important that the work is fun, and attractive, while earlier generations place more importance on working conditions”.
Moreover, as Dr. Crespo explained, there is a change in terms of what employees have to do, which we must also take into account. “The most sought after skills have changed: in 2020, emotional intelligence and critical thinking and more highly valued, as is creativity”.
All these changes affect each employee’s perception of the task they are performing and, therefore, determines the best channels for compensating them effectively.
Money matters, but it isn’t everything
What matters most when compensating employees? Money? Working conditions? Recognition, promotion prospects? As Dr. Crespo explained, money is certainly one of the most important factors in terms of work satisfaction, but it is not everything. To demonstrate this, he shared the results of a study that shows the current preferences of a large sample of the working population.
According to the results presented in the conference, nowadays, the fact that work is interesting is a hugely important factor in terms of our work compensation. This is also true of good working conditions and the responsibility given to the employee. As we can see, money only comes in at sixth place.
However, as Dr. Crespo emphasized, although the results of the study give a general overview of the priorities of modern employees, we must not forget that the generation (Millennial, Generation X, etc.) to which each employee belongs affects the way they see, interact with and feel about the professional world.
As a student noted in the conference, “the older an employee is, the more importance they place on working conditions. In contrast, the younger they are, the more the salary seems to matter”.
After an interesting discussion with the audience about the results of the study, Dr. Crespo finished off by mentioning Employer Branding and all aspects of generating loyalty among human capital.
Therefore, just as companies offer unique value propositions to their customers, nowadays, it is essential that they also offer a value proposition to their employees to stimulate commitment and build loyalty. Through initiatives and compensation models, companies have to build an employer brand that motivates and retains employees, giving a sense of belonging to all members of the company.