It may seem like an odd question at first, but one that is increasingly considered. Organizations are facing greater pressure to address modern employees’ rising expectations and to also achieve greater levels of performance across the workforce.
Leveraging compensation more effectively is just one area among many within HR that is coming under greater scrutiny and appears ready for transformation.
Take two recent examples. My previous post examined what can happen when a paycheck encourages “prisoner” employees, unmotivated to do much more than just show up. Now, an article in The Economist examines some of the stock-based compensation strategies used by Silicon Valley giants to “hoard” top talent and the negative impact it is having across industries.
Reports like these fundamentally challenge how compensation can more effectively drive performance. For the business, it becomes crucial to weed out underperformers at one end of the spectrum and prevent an escalating arms race for talent at the other. That can be a balancing act that is hard to maintain.
Part of the solution may be in moving compensation (or at least a portion of it) closer to performance as it occurs, helping to even out some of the issues above and more accurately reflect employee contributions in real time.
Crowdsourced compensation can make a big difference. Here are four reasons why:
- It creates a strong connection for each employee, linking specific behaviors and accomplishments to overall group success and the broader organization. Compensation is directly tied to performance as it occurs, and comes from those who benefit from that performance, regardless of level.
- It creates a culture of performance where the emphasis is not only on what one contributes, but also on recognizing the contributions of others. When this occurs, employees internalize the core values of the organization and become actively involved in building collective potential.
- In addition to the focus on individuals, crowdsourced compensation is better able to acknowledge the performance that comes from teams and groups. Compensation can follow the projects and teams that form and reform throughout the year, more closely aligned to the work that is being accomplished by those teams.
- Finally, crowdsourced compensation can help an organization attract top talent, signaling the importance the organization places on creating a human workplace and creating an ownership mentality among employees for performance.
A shift toward including crowdsourcing as a part of the overall compensation strategy can help companies realize some of these benefits. It is an opportunity to align compensation to performance in real time, ensuring that compensation dollars are used effectively.
How might your organization shift some of its compensation toward crowdsourced methods?
As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.