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03/27/2015

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Hi Sandrine,
Welcome to the Café!

I know many companies follow this approach of asking their employees what they value. My concern is that it may mean you don’t have a workforce strategy and you could become the tail being waged by the dog.

My preference is to start with a workforce strategy. What is the target workforce you are trying to higher, how does it differs from your competitors, where are you/they located, and so on? Are you looking to hire and train or higher experience?

Then you look to design strategies and programs to attract that workforce. If the employees that you focus on in your segmentation don’t represent your workforce strategy you may be miss aligned. If you workforce strategy is to try to attract everyone I believe you run the risk of attracting no one.

Thanks,

Hi Trevor,

Great comment !

I think it's an excellent idea to integrate the specific workforce types that you are pursuing as an organisation, as you mention.

Today's world, including through social media, is all about "voice of the customer".

It's like in the world of consumer marketing : companies target specific consumer segments, design products to please these segments, and test these ideas through surveys, blind tests, focus groups etc.

We can do the same in Rewards : at the meeting point of your targeted workforce and what it expresses it values most in its rewards package, you will get really attractive to the employees that you wish to hire or retain. You get the company side, as well as the employee side, combined : twice the power and usefulness !

Thanks for commenting :-)

Great post Sandrine!

I think companies will begin to segment more and more in the future.
A good place to start is with finding out what the company's current targeted group of employees want and then begin to use that information to build a brand that will attract employees with similar skills externally.

Welcome!

Thanks for good advice about how to more effectively test the effectiveness of investments in people. Especially in this world of 360-degree feedback communications, it would be weird to ignore honest input from employees. Along with other metrics, frank opinions will help guide and improve the payroll spend and other expenses intended to engage workers. The more accurately the messages can be refined, the more meaningful and useful the inferences.

Thanks for your comments Jacque and Jim. Glad you found the article useful :-)
Sandrine

Thanks for this piece. I love and advocate the use of Employee Segmentation, EVP, etc. in rewards strategy.

I find that there is still a strong need to educate internal stakeholders (including may in HR) that employee segmentation is about more sophisticated grouping of employees than the basic and old approaches based on demographics, job level, grade, and other obvious categories. Employee Segmentation delves into domains of psychographics, nature of employee competencies, criticality, ‘core-ness’, contributions of employees (e.g. rainmakers versus support, versus 'surplus'/outsourceables, etc.), etc., etc.

Employee Segmentation when well orchestrated is better basis for another reward strategy essential: reward differentiation. Across-the-board approaches to rewards 'STRATEGY' for all employees are truly old, even as we may have good reasons for administering certain non-strategic aspects of rewards in generally egalitarian ways to most/all.

I checked out the link to the video on the Google approach of using studies of employee perceptions and preferences -- a small aspect of the post -- and have this to say about that bit in particular:
I have some reservations about the decisions stemming from the Google study:
1. Across-the-board pay increases such as the 10% increase in base pay given to every employee regardless of performance, are expensive, create or entrench entitlement culture (versus performance culture), discourage high performers, and are generally unsustainable, especially in downturns.
2. Although I believe strongly in studying employee preferences and perceptions as bases for alignment of rewards and have used or advocated this approach for over 15 years, I have also come to find that when asked what they prefer / value, employees tend to emphasize getting MORE fixed compensation (base pay) plus Allowances, Benefits, & Contributions to savings and retirement programs, etc.: a recipe of A-B-Cs that can be very costly). This seems to be the case regardless of geography (4 continents, including North America, and counting in my experience), age group, etc. This consistent gimme-more-fixed orientation leads me to believe that we need to be more sophisticated not only in how we probe employee perceptions and preferences, but also in how to use the information. I am of the opinion that decisions to give employees what they want need to be very selectively and closely aligned with company strategy and context in ways that are sustainable for core businesses, costs, culture and more. Otherwise we set ourselves up for trouble.

Thanks again for bringing the topic of segmentation into focus.

Dear EK,

Thanks for your very detailed comment.

I agree with you that, wherever feasible, sophisticated segmentation criteria should be used. However, at this stage, few companies are large enough and have deeply integrated enough HR systems in order to be able to pull that off. Not to mention, to have enough people on the HR team to oerform this kind of analysis. This is especially true in the region where I live...

In the mean time, we can read some of the rare articles written on these practices, and hopefully get started, even if on a smaller scale. I hope my post will help inspire a few companies to think about targeted reward offers.

Regarding your second point on the Goggle example, I think that employee perceptions and preferences shift when they are more educated about what benefits mean and their value. But that would be the basis for a whole other article :-) !

EK,
The broad employee preference for fixed compensation is perfectly logical. I would find it confusing if surveys showed anything different.

Employees are very much like businesses in that they are risk averse. So much so that if you offer employees a choice of 5% increase of base pay vs. 10% bonus I bet the vast majority choose the increase in base. The bonus percentage would have to be pretty large before a significant number of employee choose bonus.

Employees prefer this for the same reasons that business prefer many stable repeat customers over larger sporadic or one and done customers. They are all risk averse.

You don't need more sophisticated surveying you need to find a way to adapt business to this fixed income preference.

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