Thinkers50 is delighted to be partnering with Mercer on an e-book, Human Centric Enterprise. I'm Stuart Crainer, co-founder of Thinkers50. Today, I'm talking to one of the contributors to the e-book, Shanthi Naresh. Shanthi's contribution looks at the next generation of rewards in organizations. So let's start, Shanthi, by asking, what does the idea of the human-centric enterprise mean to you?
Well, Stewart, first of all, thank you very much for having me on this interview, and for getting me to contribute to the e-book. When I think of human centric, I think the title actually tells it all for me. Human at the center is what the human-centric enterprise means for me.
And it actually means that organizations are recognizing that they're going to be powered, their survival, their growth is going to be powered by people. And therefore, they are coming up with a set of policies, philosophies, and practices that revolve around that humanness in that enterprise. They know what people or the employees who are working there for care about, what they're asking for, and they're responding to it through these philosophies and practices. So to me, that is human-centric enterprise.
What amazes me is that they didn't do this before. What has been stopping organizations recognizing the fundamental humanity of what they do?
Human centricity has always been present in organizations in some shape, or, form and it has evolved over time. And what's actually leading to this big sweeping movement towards human centricity, I think, is the kind of changes we've seen around us. Even before COVID affected us, I think a lot of people, a lot of organizations had started recognizing differences in needs of people. A need to balance the organization's profit motives with what mattered to employees.
And what COVID has done is actually changed the nature of work, the type of people in the workforce, and where work is happening. We did have work from home even before COVID, but that was an attractive proposition that some leading edge organizations offered to their employees. Now, COVID has changed that completely, where work happens from has changed. The kind of work that is done today can be from anywhere, any place, and at any time sometimes. So that has actually led to fundamentally, the human-centric enterprise becoming more and more evolved.
In the e-book, you map out what you call the next generation of rewards. Why do we need to rethink the world of rewards in organizations?
If you'll just go back in history a little bit, the purpose of rewards is actually to-- it's to fulfill a contract. To get the employees into work, but also make them feel happy as they're working there. And it essentially used to be fixed pay, but now with how work getting done, where it's getting done from, and who's doing it changing. So fundamentally, the shift in rewards just is natural. It just has to evolve to follow how work is changing.
And let me talk a little bit more about what this change is. So one of the changes is, we always used to pay for a certain number of hours, but we paid it as in fixed amounts of money. But that's changed because project-based jobs have become quite popular today. People are working from home, some people are working from the workplace. Do we need to treat that differently? That has changed.
What is the notion of rewards to employees? Do all employees actually care only about money, or are there other things that matter? And has the whole concept of rewards itself changed? I think these are some of the fundamental reasons why we call what we call as new age rewards today.
So the definition of what rewards are is now much wider in the way you interpret the world?
Yeah. And again, it's not that it changed overnight. It's been evolving. I think in the earliest days, rewards meant money. And I cannot help but think about comparing how rewards have evolved to Maslow's hierarchy of needs. So you think about it a little bit. The first set of needs are your physiological needs, and money seemed to fulfill those.
But as people evolved, their lifestyles evolved, then the higher order needs started to become more prominent. So organizations actually had to go out and not just hire but retain good people. They needed to cater to a whole range of needs along the hierarchy of Maslow. So organizations started adding benefits. So let's provide safety and security. How do we do that? Let's do it through benefits, insured benefits, for example, was one.
Then organizations started recognizing that well, is that enough? I think people want to spend time with their loved ones. They actually care for affiliation. How do we build those into our rewards system so that the employee who we are delivering these rewards to starts valuing those? So leaves came into play, flexible work, for example, started coming into play. So benefits beyond insured benefits.
And I think the most interesting part of it is the whole self esteem need that Maslow talks about. And I think about it in a world of uncertainty with respect to jobs. Uncertainty about being employable for the sustainable or for the near-term future. Employees care a huge deal about, what is the organization doing for me to help me hold on to my self esteem?
To build on that, to make me employable. And therefore, what kind of career needs is the organization fulfilling for me? Are they helping me to skill better? Are they giving me learning opportunities? So when I look at the new rewards definition, it encompasses all of these.
There always seems to be a lag between rewards catching up with the changing reality. I suppose it's always going to be that way, isn't it? I think so. It's reactive. It's reacting to what people want. It's reacting to where the organization is headed. So I think it's going to be a bit of listening to both. What the organization wants, what the employee wants, and trying to balance those two.
But overall, rewards need to be more agile, and more flexible, and more dynamic.
Yeah, absolutely. I think in the e-book, we speak about the characteristics of major rewards. And when so much is changing around you, it's absolutely important to be agile and adopt what makes sense for the organization. But more importantly, what makes sense for A employee. And so that's the next characteristic. For A employee, what does that mean? I think it's about personalization.
No two individuals may share the same set of needs. How does the organization then cater to their needs and satisfy or motivate both of them to come and work with them, and stay with them? Just taking an example of somebody who is going through a life stage where they need to be saving money to buy a house. Money is going to be extremely important.
But for somebody who is already a parent of two children and COVID is shut down schools, you all saw this during COVID. And this may happen again. They want the flexibility to be able to work at their own time and be able to manage their responsibilities as a parent as well. So flexible work be better. So personalizing agility is one aspect, personalizing is another.
And I think the third one that you touched upon too it is, this whole concept of fairness and equity. Employees want to be treated fairly today. There's a lot of information available to them. So who is going to give them that information? How clearly? How transparently? Actually, is another thing that's the characteristic of new age rewards. What am I entitled to? Why is this fair for the work I do? And how does it compare with everybody else around me?
And you write in the e-book about organizations like Whole Foods and Verv where they have a great deal of transparency around rewards. And I think the transparency issue around the rewards is really interesting because will it catch on? Because it's been talked about for a long time. There's always been outlier organizations where there's a great deal of transparency, but it doesn't really seem to-- the mass of the rewards world isn't telling each other about what every person earns.
No, that's very true. So what is transparency? May evolve over time. It may be different what seems today as very drastic, as in the case of Whole Foods and Verv, may actually become quite normal in a few years' time. And I'm just reflecting on my own history and background working in rewards.
Many years ago, companies did not share anything around pay ranges and where an employee stood in that pay range, for example. But that's become quite popular. Many organizations have started sharing the pay range and positioning the pay range for an employee today. Many organizations in the past-- few organizations in the past used to monetize the value of what they were providing as non-monetary benefits, and show it to the employee and call it a total reward statement.
There's been a lot of movement and adoption of total reward statements today. So an employee realizes, what is the organization giving to me? So it would not be surprising if many more organizations went the Whole Foods way or the Verv way, and actually shared individual salaries, if asked or even without being asked.
Which organizations really get this? I mean, Whole Foods and Verv are good examples of transparency, but there are other organizations that stand out, which really seem to understand this?
Yeah. And there are a few organizations that are transparent. For example, HP many years ago made the total rewards statement transparent, right? Now, is that enough today? It's probably not enough transparency anymore, right? I mean, I'd rather move away from the subject of transparency to saying that there are some founding principles that leading organizations are looking to adopt, and commit to, and we've spoken about this in the e-book. And we've called it the Good Work Standards Framework, something that in the World Economic Forum has come up with.
Many organizations have signed up and committed to following the Good Works Standards. What do they mean? It means fairness in pay. It means caring for the overall well-being of the employee. Learning and skilling, being inclusive in pay, and being transparent. All of those. So it's not just transparency, but it's about a whole host of good things to do, the right things to do as a responsible employer.
And Unilever is one leading example of having adopted the Good Work Standards. Marsh McLennan, the company I represent, has also signed up to following the Good Work Standards. So we're all on that journey somewhere. Alliance is another organization. So a number of organizations around the globe have signed up and committed to the Good Work Standards.
When we think about some other forms of-- some things that are not part of Good Work Standards but I think still good work practices, flexibility is one of those. Paying for skills. What is the current monetary? Ensuring that people become employable in the future. All of those have been adopted at scale by a lot of technology organizations.
So I think a number of organizations that have done this, we've referenced quite a few in the book. Off the top of my head Netflix, Google, Microsoft, IBM. Many of these organizations have some of the other good practice entrenched in their reward system.
Yeah. It's interesting that a lot of them are tech companies.
That's right. That's right. It's true. Technology is a huge enabler of a lot of transparency, a lot of new forms of rewarding. For example, peer to peer recognition is another new form of reward that we didn't see. We think about Maslow's need for love, appreciation, affiliation. If rewards can be delivered to you through a peer who recognizes you, that can be quite powerful. And technology plays an important role in delivering all of these things.
What about the changing role of the rewards team? It seems to me in some ways that rewards within organizations is curiously neglected.
Are you talking about the rewards team within organization?
Yeah. The rewards team. Yeah. It's kind of central but it's peripheral in a way.
Yeah. It's interesting I will agree and disagree with you. I think the rewards team can get more prominence in the organization, for sure. But the rewards profession is always short of good talent, which actually really means that there's opportunity for some good human centric rewards professionals to find jobs and build careers there.
And you asked me a question about what's shifting, what's changing, and what does it mean for the rewards team? I think keeping pace, and like you said, can you be ahead of all the changes that are happening? That's a little tough, but can we even keep pace and do something to differentiate ourselves from competition? I think that is a big job for the rewards team.
I can see that the rewards team will need to be extremely agile. Continuously listening to what the employees want, be innovative because you have to be different from the others. So how can you be innovative and yet be within the boundaries of a budget that the management has given? And be aligned in terms of your rewards actions with the organization's direction, as well as what the employees want. So I think quite a challenging task but a very interesting time to be in the rewards profession.
And do, you think the issues apply across virtually all companies or we really talking about just large organizations? Because smaller organizations, you associate them with more flexible systems of rewards.
No. I think the challenges are equal in number for large and small organizations. Large organizations perhaps have the power of technology. But in large organizations, there is a very big intermediary with a great influence on employees and their behavior. That's the manager.
So how large organizations not just use technology, but use the manager as a powerful advocate, a change agent, and a lever for communicating back and forth between the employee and the rewards team. That's extremely critical and different from small organizations. I think small organizations have the flexibility of being very innovative, personalizing for employees, and actually being more transparent.
Because in small organizations, and I've done it in lots of parts of Asia, sharing your compensation data is very, very common amongst employees. So somebody, a colleague will just walk up to another and say, "Hey, this is what I got as a bonus." So that's very common. So transparency, that's why earlier on, I mentioned that who is being transparent about salaries is important.
Yeah. I suspect the cultural differences, as you look around the world, are probably incredible in the world of rewards. People's willingness to be transparent different in Asia, Europe, or wherever, which must create huge challenges for global organizations.
That is absolutely true. And so the whole concept of being global but being sensitive to the local needs, and actually having people who understand local needs as consultants to the rewards team, if not permanent employees of the rewards team may be one of the solutions.
Shanthi, looking 10 years ahead, where do you see the world of rewards then?
Well, I have a feeling that the employee is going to play an even more crucial role in crafting what his or her rewards portfolio is going to look like. It's already there today. We give flexibility but the organization chooses the menu of options that an employee can pick from. I suspect that the employee is going to come into the organization and say, "Hey, here's what I want in terms of money.
Fixed, performance-based if at all that's relevant. Or pay me for my skills because that's what is most important to me. But by the way, I'm going to work with you only if you cover my extended family for all types of benefits, medical life insurance, et cetera, and you give me the option of maybe even moonlighting." Who knows? Moonlighting has come up as a topic of discussion during COVID times and the flexibility that everybody is offering. But maybe moonlighting will become part of the rewards package. We don't know about it.
But most certainly, I think the traditional notions of paying for a position, paying for performance, paying for the person are going to become more and more person centric, which means what skills do I bring to the table? What's the market value of those skills? What do we need above and beyond that to make me sustain myself and have much more self esteem? And yeah.
Yeah. I mean, I suppose the traditional trade off has been flexibility and uncertainty. That you had a flexible package but it didn't bring the certainty of an inflexible package. But from what you're saying, that the flexibility and uncertainty balance will change over the next few years, or is changing.
I think so. I think there's going to be much more power in the hands of the employee and that's what will bring in the entire change.
Yeah. One of the examples you cite in your article is about Bosch, and their combination of common and long term targets, and business unit targets combined with company targets and individual targets is a very flexible approach. But it's also the long term element of it is really interesting.
That is correct. That is correct. And I think the long term rewards have always been there, but they have been restricted to a very small number of employees. Maybe as more and more employees, especially gig workers, get into the organization, they may want-- they may be contributing significantly to the IP of the organization. In which case, they may say, "I do want to monetize that over a long term." So things may change even in terms of who is asking for that long term reward, and who the organization might want to consider from a long term perspective.
I wonder what Maslow would think.
Well, I guess the moment the person is in the center, you might think that we've achieved self-actualization. Well, that's not true but I'm just saying.
But I suppose self-actualization with rewards packages that reflect that is the ideal.
It'll be great to get there. At a very personal philosophical level, I'd like to think that rewards should not be part of self-actualization. You're right, actually rising above that to be self-actualized. But maybe everybody doesn't think similarly.
Even the self-actualized have their price, I guess.
Exactly. Yes.
Shanthi Naresh, thank you very much.
Thank you, Stuart. Thank you.
