When your organization begins a discussion about business strategy, it should automatically trigger a simultaneous discussion about talent strategy. Companies that want to succeed in this increasingly complicated business environment have to turn their focus to workforce engagement if they want to ensure the right talent is available to implement long-term business objectives. Identifying internal sources of future leadership and implementing mentoring and training programs to foster engagement is a good start, but not enough.
Everyone, including the board, management and HR, should evaluate if the right performance management systems, total rewards programs and retention systems are in place. Building on Pearl Meyer’s recent report “Work Has Changed: How Boards Navigate Disruption and Drive Human Capital Transformation,” here are some specific actions that can help your company attract, retain and engage employees at all levels.
- Increase your focus on an individual’s potential (e.g., learning agility), and correspondingly de-emphasize pure results.
- Deploy career coaches as part of your HR organization to help employees navigate career paths and understand what is required for success.
- Include learning goals as part of your employees’ key performance indicators (KPIs), and back that up with monetary or reputational recognition for achievements or successful completion of purpose-driven projects.
- Ensure greater transparency regarding opportunities across the organization and identify skills that match individuals with those opportunities.
- Encourage input on performance from outside an employee’s direct manager or division to encourage learning agility, skill development, and cross-functional teams.
- Expand pay bands and structures to accommodate greater compensation differentiation based on potential and learning achievement for similar roles.
- Understand the wants, needs, and motivators among targeted groups within your workforce and tailor your total rewards.
- This can be uncovered through interviews, surveys, etc. and can really pay off.
- Recognize that there are differences in what drives various generations (see chart below) and evolve your total rewards strategy to address the needs of your changing workforce. Customizations could include:
- Flexible work locations and schedules.
- Continuing education allowances or loan repayment.
- Flexibility to exchange monetary compensation for time off.
- Offering on-site childcare or daycare cost benefits.
- Free financial counseling for staff to reduce money-related stress.
- Customization of benefit/retirement selections.
Source: “Americans Favor Workplace Benefits 4 to 1 Over Extra Salary,” AICPA, November 2018
- Understand your senior employees’ current stock ownership (if any) and determine if any special equity retention grants or cash bonuses will be needed in the near-term. (Note: publicly traded companies should keep in mind proxy advisory firm policies, potential Compensation Discussion and Analysis (CD&A) disclosure, and overall optics if any special grants are provided to the CEO or other NEOs.)
- Explore equity choice plans that allow and encourage a broad participant base — or subset of participants — to select the composition of their equity awards, whether all stock options, all restricted stock, or a mix.
- The goal of an equity choice program is to give employees ownership of their compensation and maximize the perceived value of long-term incentives (LTI).
- By customizing based on an individual’s unique needs, life, career stage, and risk profile, these programs can also cater to different generational preferences.
- While the prevalence of these customized programs is small, interest in implementing them is on the rise.
- To the extent your company has changed its business strategy and wants to consider challenges facing your senior team, explore what other companies have done to align their executives’ short- and long-term incentive programs to business transformation efforts.
- Our firm recently researched how some companies manage their short-term incentive (STI) and LTI programs in periods of change. Overall, we found that practices vary, and companies chose designs specific to their current circumstances and strategic intention. Summarized in the chart below are six examples.
- Some of the various alternatives adopted included:
- Emphasis on strategic/milestone goals
- Changes to incentive metrics
- Addition of modifiers
- Special retention grants
- Changes to LTI mix
The final, and most important step to help your company attract, retain, and engage employees at all levels is establishing accountability. The “Work Has Changed” report suggests creating an internal and interdisciplinary human capital committee charged with talent management across the organization. With HR and the CEO as co-leaders, the committee should include representatives from various management levels across business units and/or departments. Including a board member to participate or provide guidance to the committee offers a natural channel for ongoing report-outs to senior management and the board.
If your company is serious about workforce engagement, taking steps like these could lead to lasting and positive change in your corporate culture.
About the Author
Lianne Richardson is a principal at Pearl Meyer.