I passed this thought along in January because it seemed so absolutely true when I read it. (Please don't ask where, I wish I could remember.) To say that the metamorphosis to tech enlivens every cubicle in America at every working moment is nothing startling or revolutionary. Mirroring biological metamorphosis, our businesses are in the process of transforming in distinct stages from immature technology users to technology-driven strategists. Each of our companies evolves from early stages, where technology at the very least influences, through iterations to later stages where for many employees technology defines what they do for your company each day.
This month the Harvard Business Review (HBR) is making a solid case that HR innovators are using tech principles to " . . . move away from a [longstanding] rules- and planning-based model . . ." to an "Agile" model. In other words, their program design decisions are being guided more and more by "Agile" principles--in particular the following--which have guided software design and the field's culture of innovation for many years:
- The organization is a fluid network of players collaborating toward the same goal, so communications can and must flow easily in all directions.
- The organization's purpose is to deliver more to customers, which all employees strive for with passion.
- The type of internal operations that vitalize these principles are small AUTONOMOUS cross-functional teams.
I think this is exciting stuff, so I thought I'd highlight three of the case studies from the HBR article to illustrate how HR mindsets are beginning to align with the Agile model -- and HR influence has flourished as a result. Each of these organizations have broken away from the "control" mindset that drives the traditional annual merit pay model to design programs that optimize the way their employees work now.
Patagonia clothing company (app. 1,000 employees in 2017) has eliminated annual raises for its knowledge workers by tracking compensation market rates and adjusting wages more frequently than annually, if needed. Salaries may also be increased if employees take on more difficult projects. There is also a financial recognition budget for the top 1% of individual contributors. Patagonia moved in this direction to address the needs of the agile work scenario described above, including the shift away from once a year raises that research indicates allows too much time to go by to be an optimally effective motivator. Patagonia's strong culture and impressive employee ratings earned them a Great Place to Work designation in 2017.
In a similar vein, DigitalOcean cloud computing platform (app. 300 employees in 2017) adjusted its compensation practices to be more attuned to their culture of collaboration. Salary adjustments occur twice a year, if needed, to align with the market and recognize performance. To discourage competition for raises, no merit increases are paid although there is a financial award to recognize the top 1% "of achievement." To replace the traditional competition for the "exceptional" rating, the company maps where employees are having impact on the business and where they need to grow.
Regeneron, a fast growing biotech (more than 6,500 employees worldwide in 2017), has tailored its performance appraisal process to a new norm of continual feedback. In spite of the increased complexity, the company has introduced four separate performance appraisal programs to reflect the work methods and feedback preferences of the four major employee groups: Scientists working on drug development, product supply, field sales force and corporate. For example, the scientists crave metrics and are professionally focused on developing their competencies so they meet with their managers twice a year. Customer-facing employees have manager meetings that include feedback from customers, and so on.The company feels that HR's shift from a rules- and control-focus in performance management has benefited the company far beyond the increased HR costs.
If you check out the HBR issue, you'll find many more case studies with a wide range of talent innovations, plus an additional article with ideas you can incorporate to make the most of your own metamorphosis. "Companies that are adopting agile talent practices are giving a lot of thought to how employees experience the workplace--in some way, treating employees like customers." It's a philosophy that has long been discussed and espoused at Compensation Cafe.
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.