Nowadays, those who play a role in HR are increasingly faced with the need to have a better understanding of employees’ preferences when it comes to incentives.
The performance appraisal is – and increasingly will be – based on qualitative aspects.
Although the basic salary is still important, in the next 5/10 years, lifestyle incentives such as smart-working, flexible hours, extra holidays… will be decisive drivers in the employer’s choice.
Long-term benefits, such as shareholdings, no longer seem to be attractive. Nevertheless, they continue to be used especially for executives and senior managers, in order to retain them and thus ‘bind’ them to the company.
It is the job content, together with work life balance, to emerge as the main criteria for both attracting and retaining new generation talents, and companies should therefore accommodate to their expectations.
The necessity to implement open and transparent strategies – such as equal pay – will become crucial, especially as companies shift from hierarchical to flexible career models.
Generation Y is more likely to change employers if they perceive that the reward strategy is not aligned with expectations or is ethically weak.
Team performance and goals are becoming more relevant than individual ones. And so are evaluation systems: frequent meetings and conversations with supervisors – even on a weekly basis – are replacing evaluations on an annual basis. Moreover, feedback does not only come from managers but also from colleagues.
In the past, relying on quantitative performance criteria often led to unethical practices and behavior. Using qualitative criteria will become key in the years to come.
In conclusion, a correct and effective ‘compensation & benefits’ strategy should include the following elements:
- A tailor-made remuneration system in line with employees’ work-life balance desires;
- Customized benefits in accordance with employees’ expectations, including: flexible working, job sharing, etc.;
- Linking remuneration to team and company performance, going beyond the traditional annual individual evaluation process linked to bonuses;
- Promoting an entrepreneurial behavior of employees to contribute to the success of the company.
“Choose a job you love, and you won’t have to work a single day in your life.”