Rewards for the "Workforce of One"?

Marketers, recognizing the power of the tailored "have it your way" customer experience, jumped on the customization bandwagon years ago.  Is HR - and particularly rewards - heading in the same direction?

The authors of a new book Workforce of One have put forth the argument that it should be, and that greater productivity and improved profits are the potential benefits of a well-designed strategy that tailors the entire work experience - including rewards - to employee needs and interests.

The notion that employees have different reward preferences, based on their circumstances and other considerations, probably doesn't surprise any of us.  A recently published WorldatWork research study Beyond Compensation: How Employees Prioritize Total Rewards at Different Life Stages (report available on their site for premier members) provides data that confirms what many of us already sense is true.  The study, which (thankfully) digs beyond broad generational or gender stereotypes to look at a number of life stage and social status variables, puts forth some interesting findings based on bi-variate analyses which identify individual life stage variables that are significantly related to the prioritization of rewards:

Older employees value benefits more; younger employees value work-life and development more.

More experienced workers value benefits more; less experienced workers value work-life and development more.

Men favor money; women favor balance.

Work-life is significantly more important for parents with young children.

Benefits are significantly more important for breadwinners.

The challenge here, as the authors of Workforce of One acknowledge (BusinessWeek.com Book Excerpt), beyond the overwhelming nature of the customization concept to HR departments that are already struggling to make headway in the aftermath of the recession, is creating a system of flexibility that is intentional, fair and equitable.  The custom-tailored work experience is already a reality today for many; the BusinessWeek article estimates that 25% to 40% of employees have some type of individually negotiated work arrangement in place.  But these one-off, reactive deals not only leave an employer vulnerable to charges of unfairness (or even discrimination), they also leave the impression that flexibility is a perk reserved for the elite and the most strident negotiators.

What I like about the method purportedly presented in Workforce of One (which I have not yet read, but intend to) is that it features a top-down, structured and rules-based approach.  I think that this is necessary in order to provide customization that is purposeful, strategic and fair.  Being too flexible - and decentralized - about flexibility has too much potential to come back and bite us.

And what about linking customization to performance at some level, hmmm?

Whether or not reward customization is a trend that will truly take hold, it is an interesting idea to consider.  What do you think?

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time.  Follow her on Twitter at @annbares.

Comments

[E. James (Jim) Brennan]

Perfectly logical, to continue the reward customization process for greater specificity and effectiveness.

Salaries and even most wages are already customized. Payroll deductions are currently personalized. Very few folks earn exactly the same amount of money or even value the various components of their total remuneration package equally. Some of us have long predicted and promoted individual benefits customization. The future lies far beyond the simple cafeteria approach, just like executive comp packages are rarely standardized and mass-produced in ironclad rigid formats imposed uniformly on every corporate officer in the same entity.

Surprised if ten years from now, virtually everyone whose work is particularly valued doesn't have a completely unique personalized total remuneration package with tradeoffs in every component element, from hours, time off and workplace environment to economic terms. It's inevitable, because customizing produces a more individually appropriate and mutually beneficial result.

[Chris Dobyns]

An interesting concept, and certainly one that has been explored and discussed to a limited extent elsewhere. The "have it your way" customization reference bears a flattering resemblance to a similar topic posted to WorldatWork's Online Community which garnered a considerable amount of traffic and follow-on discussion: http://www.worldatwork.org/waw/community/discussions/discuss.jsp?did=15601

I think this is definitely the next "high frontier" for total rewards professionals to start preparing for now.

Make mine extra mayonnaise and no pickles please . . .!

[Ann Bares]

Jim:
Interesting prediction. Wouldn't bet against it!

Chris:
No pickles! Sacrilege! That's two of you now predicting this as the next frontier for rewards.

Thanks for the link ... and both of you, for the comments!

[Michael Haberman, SPHR]

Anne: I have a contrarian view point of this continuing along the path of more customization. To me the political winds, which controls government actions, is moving away from individual rewards and more "equalization of wages." Much like a union model. So unless the political winds change I think we will see moves toward standardization of wages in the name of "fairness", more charges of discrimination for reward plans that do not meet this "fairness" standard. And in benefit plans we will be moving to a national plan to a much greater extent.

[Vita Taylor]

All great points...

Is Standardization and Equality the same? Do they equate to Fairness?

Maybe this is a topic that we should get out in front of. Especially if, as Michael contends, the words: equalization, standardization, and fairness are viewed as synonymous.

Perhaps the focus of equality and fairness should be gauged on the total remuneration package, rather than selectively - or conveniently - on base pay.

A few days ago, the Alliance for Work-Life Progress Executive Director at WorldatWork testified before a Senate Subcommittee. Her task was to educate the subcommittee on work-life issues and the need for the inclusion of work-life flexibility in programs for Federal employees.

Similarly, we as compensation professionals may need to educate lawmakers regarding the level of standardization needed in order to create equality and fairness.

If what we are seeking is both flexibility and fairness, I would suggest that the measure needs to be applied to employees' total remuneration.

[Vita Taylor]

Actually..

I take it back -

I would suggest, as the WAW study unveils, that total rewards is the right target (not total remuneration).

Sorry for the brain discombobulation ;{

Interesting thing is that if we did start targeting total rewards as the goal for equality and fairness, we might be able to attain both equality and fairness sooner than just evaluating it purely on base pay.

[Ann Bares]

Mike and Vita:

Good follow-on thoughts, and good reasons why - as you state, Vita - that we'd be better off getting ahead of the train than being yanked along behind it.

And your comments bring up other good questions for me. Like... to what extent and for what elements would the new, flexible total rewards package be linked to job value? To performance (individual, organizational, or whatever entity in between)? To what extent and for what elements is it an equal-across-the-board opportunity?

And, so, do we end up with something like "total reward ranges" rather than individual salary ranges? And what do those look like ... and how are they benchmarked?

Lots to consider, particularly if we want to be thoughtful, strategic and proactive in conceiving and designing the application of this concept.