Performance linked remuneration

Performance linked remuneration

HR needs to facilitate people and prioritize the money that company has, to reward the better performers more rather than reward equally

During a panel discussion on Management of Paradoxes at the NASSCOM HR Summit 2010 held recently at Chennai, Elango R, Chief Human Resources Officer, MphasiS, Hari T, CPO, Mahindra Satyam and Piyush Mehta, SVP HR, Genpact, highlighted the fact that paradox existed since long, it's nothing new. What's important is the context which keeps changing and the reasons which are causing these paradoxes.

They outlined 3-4 trends in the IT BPO industry. On the demand side, we have

1. Mega death of the mega deal, leading to shorter transaction time which clients are asking,
2. Shorter returns.
3. Consolidation of structure, resources, business efficiency.
4. Demand for innovative solutions, faster access, transformation to new tech - demand.

On the supply side, we are experiencing:

1. More sub matter expertise,
2. Direct link between productivity and engagement.

It's for HR to work with business and deliver. This is the fundamental paradox that HR has to work on.
HR needs to delight the investors and hire the right talent at the same time. It's no more about hiring from the regular talent pool but people who are experts in their fields. The resources require very high cost but are highly capable. While we hear about growth in linear fashion, organizations are now trying to move into non linear mode.
More returns from less people is a normal expectation. Another paradox that HR deals with is employers looking for change in resources while the customers get nightmare with this prospect given data security/protection. HR has three primary stakeholders it has responsibility towards - investors, employees and customers. If everyone recognises that 1/3 response is towards people, 1/3rd towards investors, 1/3rd towards customer retention then in a given situation, you would be able to realize what you would want to keep and what you can let go.
How many in HR have the ability think with heads, feel with heart and yet do what is right and communicate what is the rationale behind the decision, before it's taken. There's no right answer to paradoxes and again today's right answer may not work tomorrow. HR today has to stop being Mother Teresa or a nurse, caring for all.
Also it's not about who to drop out of investor, employee and customer, in a given situation but do you have a seat at the table to take the decision. If we need to ask do we as HR have the ability, competency to influence who to drop.
A question asked often is how do you manage scale and complexity in scale? At Genpact if 1000 people are to be hired in a month, decision taken was not allow entry level cost to increase. For last 5 years the entry level compensation has been the same.
The focus has been more on make and build factory. Resources hired are not well equipped but are upskilled once they join. Retention impacted positively because of this initiative while at the same time, employability issue has been taken care of. The other decision that was taken was to move from tier 1 to 2 to 3. Today large part of HR is focused on facilitating people. The need of the hour is to digitalize solution for HR to better manage the team than look at higher qualification. Other innovations like self managed team can be done more.
Another key question that HR needs to address is why not all employees can be rewarded equally. In current times, business is not able to give you rewards as earlier. This is the reality HR has to deal with. An example which beautifully explains this is a 10 compartment train which has only 1 engine to pull it through.
HR needs to prioritize the money that company has to reward the better performers more rather than reward equally. HR has to learn to accept not able to reward equally. In one of his articles, Hema Ravichander wrote that you can't be the best employer to everyone but you should be the best employer to the best performers.
Deal with limited kitty but reward good performers. Today compensation highly overrated, focus more on employment offer. Training, career development, coaching, environment to be included in the package. We need to create an employment offer, which offers more than just compensation. Create stickiness in the organization and help retention. Attrition today is 50% on demand supply and 50% on anxiety of HR. Combination of both lead to the salary spiral.
A paradox that HR deals with is to hire the best in class and keep the attrition low. Attrition is opportunity led rather than internal factor. Love for company does not spell continuity for company. It's the opportunity outside which makes an employee takes it up - it could be technology, city or any other factor. However, if it's happening too often, then people are not telling the truth or you are not asking the right questions.