Do you have an employee reward model in your organization? Have you ever thought, who has designed it and for what purpose? Sometimes HR people design the reward model to keep people committed to the organization. In some organizations, management designs the reward model to keep people motivated to work. Financial departments may reward people based on financial numbers like growth in turnover and profit. And in some cases, it may not even be a bad idea to share the wealth that organization receives!
The problem with this, however, is that people may not know what exactly they are supposed to do to grow those numbers. How many times employees have been told to earn 20% more revenue this year while they are working on an assembly line? It is really hard to see the connection between the two, even though it does exist.
Business Process Management (BPM) is about managing everything that is done in an organization to provide successful customer outcomes. Also, people do what they are paid or rewarded for. Alas, organizations should combine the two things together and get the benefits of one serving the other. According to BPM research, it is very important that reward models adjust to business needs and to the processes fulfilling them. One research has shown that about 80% of the organizations in Finland have some kind of reward model. The question is, how many of those organizations have designed the reward system to support proper business process management?
If you have a reward model in your organization, take a few minutes and evaluate how many of the items that it has for evaluation actually help your customer to succeed? How many of them support you in improving business processes so that they will produce better results? I bet not many…
What should those reward models be based on then? Here are few ideas on that:
Reward model should adjust based on process changes
If you do not change the reward model when you change your business processes, people are going to keep on doing what they were used to. An answer to this is not to have high-level economic measurements for rewarding, because as I mentioned earlier, people may not know what to do. The reward model should reflect those things that will motivate people to do the things that will result to successful customer outcomes.
The model will have to reflect the business that you are in. For consultants, you can have more outcome-oriented measurement while for people working in manufacturing lines you need more accurate ones. But the difference to traditional thinking is in the ideology that each reward model is based on and also in its flexibility.
Reward model should be based on providing successful customer outcomes
As we all know, customers pay for those rewards to be given. Is it then not only fair to reward on results that come to them? Rewarding employees for growth in turnover will not help these employees to think about your customers. You get what you reward for, and that is a two-sided sword. Providing successful customer outcomes through well-designed business processes is a good reason to reward people. This requires changing the old mind-set of setting economical goals and controlling people with them. You will receive the economic outcomes if your people are doing the right things.
As a summary, my recommendation is to abandon the old ways of thinking about reward models from an organization’s internal perspective. Successful companies in 21st century design their reward models to support the successful customer outcomes produced through well thought out business processes.