Can we work anywhere we please so long as we get the job done?

One of the most difficult question facing employers is on “how to keep the people who keep you in business”. As history reveals, the traditional method to attract and retain talented people is to throw money and more money at them. While this “old school” approach appears effective until greed consumes some of them, an appealing solution is to engage talented employees particularly the younger generation with flexible work practices.

According to Marcia Hall, owner of Reputation Counts, an American Severna Park-based firm that provides workforce development and productivity training, a work-life balance is particularly important to members of the "millennial generation" who were born in the early 1980s. They not only grew up under intense pressure to get into the best schools but also have become more aware of their mortality with the terrorist attacks of Sept. 11, 2001, and other tragic events, she said. "The effect has been that their tomorrow is unpredictable," Ms. Hall said. "That means time for family and time for their personal life."

Money isn't the key to keeping Kiwi workers either - it's improving their work-life balance and supporting their careers. Remuneration consultants DSD Consulting reported on the importance of work life balance in their recent remuneration and market trends survey of 65 leading companies in New Zealand.

"Companies need to realize that, for many New Zealanders, their career and work-life balance is increasingly important. They want to work and be appreciated for what they do but they also want to be able to spend time with their families and pursue their other interests," says DSD director Susan Doughty.

DSD says the research shows bosses also need to accept that Generation Y employees don’t stay in jobs more than three or four years, so notions such as long-service bonuses don't appeal anymore. Employers need to think differently to remain interesting to their work force, especially when unemployment is so low and jobs are readily available.

Technology has allowed people to stay connected from anywhere. Perhaps, flexible working practices and "family-friendly policies" that help employees achieve a balance between work and life should be the alternate reward management practice as baby boomers retire later and employers search for talented people in a tight labor market.

With escalating fuel prices, additional taxi fee surcharges, increase on mass rapid transport (MRT) and bus fares, and more recently, an increase in the number of electronic road pricing gantries in Singapore, there is really no merit in merit pay increase.

Compensation and benefits management practitioners need to work harder than simply rely on benchmarked salary surveys to stay on the job. Instead of the 5 C’s in Singapore, "we talk about the four Fs being the key to what employees value - that's finance, future, fun and features. It's the combination of pay with a range of other factors - both financial and non-financial - that determines whether your staff will stay or not." DSD director, Una Diver commented.

Should we rethink the traditional boundaries of a “9 to 5” workday? Are flexible working arrangements and unstructured work environments crucial for recruiting and retaining talented people? Can we cultivate a flexible work culture by allowing people to work anywhere they please so long as they get the job done. Can we retain employees by introducing job sharing?

More importantly, can we work anywhere we please so long as we get the job done relevant to the (overseas)Chinese work communities?

Is there merit in merit pay increase?

In a statement released yesterday, ECA International, a global association of human resource practitioners says that Singapore workers can expect their pay to go up by an average of 5 per cent in 2008 as compared to last year's average increase of 4.5 per cent. However, inflation is likely to take a big bite of that pay rise.

According to the ECA report, the surge in prices of oil, food and lodgings will 'counter-balance' the projected big pay rise 'considerably'. With Singapore workers looking forward to some of the biggest pay rise in the developed economies, real take-home increases will be 'relatively subdued'. Most other developed economies in the ECA survey are showing forecast wage increases of approximately 4 per cent.

'This latest upswing in inflation, which has caught many people by surprise, will have an impact on real salary increases in 2008,' said the firm's general manager. Employees in Singapore are likely to experience relatively subdued real income rises and employers may have to budget for higher salary increases next year to make up for this year's relatively low increase in real incomes.

If compensation practitioners are considering an upward revision in their forecast salary increases to retain talented employees, they should instead consider the merits of merit pay. Are merit pay increases simply employees’ entitlement based on cost of living adjustment (COLA), or are merit pay increases really based on merit?

According to the Business Times report dated 10 January 2008, Singapore’s inflation rate could soar past 6 per cent in the current quarter, beating previous estimates, as an upward revision of the value of public housing kicks in this month and food and oil prices continue to climb. If employees perceived merit pay increases as entitlement for COLA, there may be an reduction in their real take-home pay.

The concept of merit pay has been around for some time. Evans (1970) believed that merit pay has its origins in the sixteenth and seventeenth centuries with the Protestant Reformation. The protestant work ethic, which views man as competitive and individually oriented, emerged from the belief that economic success was evidence that a person who worked hard was serving God; material success was equated with spiritual purity. Thus, according to Evans (1970), performance-based pay plans continue this theme by rewarding those who have worked the hardest and contributed the most.

It appears logical to base merit pay upon performance, or is it? Commentators say that merit pay plans based upon performance can have many defects, including improper design and implementation; difficulties in paying for individual performance; lack of conviction on the part of employees that pay is really linked to performance; inadequate or inappropriate objectives, criteria, and measures; as well as other shortcomings.

Merit pay continues to be a popular vehicle for rewarding employees. However, merit pay systems that are poorly designed and implemented can lead to perceptions of inequity for individuals; and these perceptions of inequity held by individuals can have a negative impact on important organizational outcomes.

Voluntary turnover is one possible response to merit pay inequity. Those who quit in response to perceived merit pay inequity are typically an organization’s better performers. The average and below-average performers are typically “not bothered” by a merit pay system that pays them the same as their harder-working coworkers.

Another possible response to merit pay inequity is that high-performing employees who receive the same merit pay as lower-performing employees may choose to stay on the job, but they may decide to lower their performance or reduce the quality of their work in the future in an attempt to restore equity.

Regardless of the methods employees adopt to restore their perception of fairness and equity, there is a need for practitioners to know if such behaviors are harmless or may create serious consequences for organizations. Talented employees, especially if they are working in (overseas) Chinese work communities, may simply choose to quit and seek their fortune elsewhere.

In administering merit pay increases, we are forced ranked and fitted into merit pay matrices representing normal distribution curves. This forced-fitting ensures that our pay increase budgets are on target. On occasions, we may "rob Peter to pay Paul" to balance the pay "bucket".

In addition, the spread in pay increase percentages between high performing employees and average employees are usually insignificant and/or inadequate to drive change in behaviors toward increased work performance.

What if a merit pay increase budget contains both cost of living adjustments and work performance outcomes? Where the quantum of merit pay increase lags inflation, as it appear to be the current situation, can we seriously talk about merit pay increase aligned to work-related performance?

Is there really merit in merit pay increase?

Will the public servants speak out?

In compensation terms, the year 2007 ended with “money” talk. As we recalled, there were debates of how we should throw more cash at people to attract, and retain them. There were also discussions on “are we paid our worth?” and perceived pay equity.

For the public servants, their salaries were revised significantly higher to reflect the amount of compensation they expect to receive if they hypothetically resign from public duty to take on their dream jobs in private enterprises.

The thinking behind compensating talented public servants with top private enterprise salaries is to induce and retain them in the civil service. Is such thinking flawed, and taken in the interest of the public, especially when the motivation of work of the private enterprises is significantly different from that of the civil service?

According to March & Simon (1958), pay, within the context of the employment exchange, is an inducement to work. Money is provided in return for work and is based upon some specified contingency relationship between work and pay. To the extent that pay is desired as a medium of exchange with instrumental value, money provides people, either as means or an end, with a purpose to work.

In addition, pay can be conceived in terms of symbolism. The concept of symbol, in this context, is defined as a sign which signifies something other than itself. Do you remember the first dollar you earned when you started work? The symbolic meaning of the first dollar you earned signifies more than the instrumental value of a dollar. Clearly monetary pay symbolizes instrumentality as a medium of exchange, but it may also be associated with outcomes such as status, security, and achievement and thus acquire symbolic value as well.

Pay and reward systems in general is symbolic of organization culture. Will there be a clash of cultures between hierarchical bureaucracies and the horizontal organizations of the private sector? Are we motivating our public servants to behave like mercenaries?

In presenting the rationale and justification for paying public servants market benchmarks, our leaders appear to discount the symbolic value of pay. In all respect, the symbolic value of the high office of the land is worth a lot more than several millions of Singapore dollars. If we cost the symbolic value of pay, our public servants’ pay may be placed beyond the red circle; a term used to denote salaries that exceeds the top pay range in their grades.

But then again, if we ask ourselves whether we are pay competitively, our answers invariably would be negative, because money is never enough. Perhaps, we should start the year of the golden rat by questioning why we are paid so much for doing what we enjoy. Should we also be asking why we are paid so much for doing so little?

In the brave new world of 2008, we hope to have less “money talk” and more on the intangible value of reward management. The GROW 2.0 initiative announced by the Ministry of Education, Singapore may be a start.

In its 2007-08 Global Strategic Rewards study, the global consultancy firm Watson Wyatt concluded that employers and employees rank attraction and retention factors differently. They commented that the first thing employers need to do is to recognise the factors that attract and retain talent, and to realise that their expectations, as employers, are sometimes different from those of their employees.

For example, the Watson Wyatt study on accounting and finance industry in the Asia-Pacific region revealed that employers ranked base pay, employer reputation and career development opportunities as the top three attraction factors. On the other hand, employees ranked the nature of work, then base pay and employer reputation as the top factors that attracted them to a job.

In addition, the recent Watson Wyatt WorkAsia study found that drivers for employee engagement are customer focus, compensation and benefits, and communication. Employees said they wanted to feel good about the products and services their employer offers. Employees also said pay, stress levels and promotion opportunities were the main factors affecting their decision to stay with a firm. The amount of respect employees received in the workplace was another important factor in their decision to join or stay with a company.

Can we ask the real public servants the factors that will drive them to commit and engage themselves with the Public Service Division of Singapore? Do they intend to leave for greener pastures now that they are paid according to the private sector? Are our talented people currently working in global corporations applying in doves to serve the Public?

If we are to stop throwing more cash to attract and retain employees, we may need to understand their expectations more fully. We certainly need to keep the people who keep us in business. What do our public servants feel most passionate about as they serve? Will the real public servants and our private sector employees please speak out?