Perfect alignment

82 ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ A reward strategy that leads to positive outcomes is one that provides equal weightage to both employee and employer perceptions, and is close to the organisational reality. HR HAREENDRAKUMAR V R AND DR SURESH SUBRAMONIAM, CET SCHOOL OF MANAGEMENT Perfect alignment I n every organisation, both the employer and the employees are equally concerned with the reward strategy, as it is a factor that protects their interests and existence. Employees naturally expect a fair reward for their contribution and, as social partners of the business, they have every right to get a proportionate share of the business gains. However, employers who are responsible for providing a good rewarding system would have their own perceptions, which many a time contradict employee expectations. This makes it tough for HR managers (HRM) to formulate a total rewarding strategy that can equally satisfy both parties. A reward strategy that does not match the perceptions of employees may not contribute to the positive attitudes and behaviours that lead to better performance. An objectively formulated reward strategy may not be a success despite its fairness, unless it is accepted by the employees. ✏ ✑ ✒ ✓ ✔ ✕ ✑ ✖ ✑ ✗ ✗ ✘ ✙ ✚ ✓ ✛ ✗ ✗ ✚ ✗ ✜ skills, experience, or performance. Perceptions vary with personal, environmental, and situational backgrounds and are an outcome of their experience and expectation. But they may not always reflect reality. They are subjective, override objective elements, and play a major role in shaping business performance. Perceived fairness with respect to rewards simply means that the employees value it as being fair. Most often, an objectively formulated reward system may not be valued even though it has maintained, a reasonable level of fairness in the distribution of outcomes. So, it is obvious that it is not the quality of reward but its perceptual acceptance that brings results. Whatever the situation be, perceptual acceptance of rewards is the determinant factor that leads to either positive or negative behaviours. It is quite difficult to have a perfect blend of perceptions and practice, leaving no space in between. The gap between perception and practice has a crucial role in shaping the behavioural attitudes of individuals. ✢ Reward perception is a reality at any workplace—in every organisation, employees have their own perceptions regarding the benefits offered to them in recognition of their ✏ ✑ ✒ ✓ ✔ ✕ ✑ ✖ ✑ ✗ ✗ ✘ ✙ ✚ ✓ ✛ ✗ ✒ ✚ ✗ ✜ ✢ Employer perception is the main driving force of organisational practice. Employers have the right and freedom to exercise their own style ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ 83 ✣ ★ ★ ★ ★ ✹ ✹ and methods that they believe would bring the results. LQLQĠXHQFLQJDQGGLUHFWLQJ Thus, at any point in time, the perceptions of the employer can be understood from the prevailing style and mode of operations. This practice side of management in turn influences employee perception, which is a determining factor of organisational performance. So, while accommodating employer perceptions, the management practice should also be capable of adjusting with the employee perceptions and the realities of practice in the organisation. As far as the reward strategy is concerned, every employer adopts a distinct approach supported by different levels of ethics and fairness, depending on the organisational culture. While some consider their employees to be a cost factor that has to be strictly controlled for competitive advantage, others consider their employees a longterm intellectual investment from which they can tap sustainable advantage over a period. Whatever be the nature of management, there will be CWB (counter-productive work behaviour) effects if they fail to accommodate the perceptions of employees properly. ✤ ✥ ✤ ✥ ✤ ✥ ✱ ★ ✳ ✰ ✤ ✴ ✧ ✱ ✱ ✬ ✦ ✷ ✲ ✤ ✻ ✳ ✥ ✧ ✳ ✥ ✴ ★ ✥ ✬ ✦ ✻ ✯ ✳ ✬ ✦ ✹ ✥ ✯ ✿ ✒ ✬ ✳ ✥ ✭ ✶ ✼ ✻ ✽ ✾ ❂ ▼ ■ ❏ ❑ ▲ ❏ ■ ❊ ❍ ● ❋ ❊ ❊ ❈ ❇ ❆ 84 ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ ✕ ❀ ✜ ❁ ✢ ❀ ✖ ❁ ✓ ✜ ❀ ✚ ✒ ✗ ❀ ✚ ❁ ✖ ✛ Organisational reality, in this context, represents a fair, equilibrium position between employee and employer perceptions, wherein both the parties can agree to continue without discontentment for optimum mutual benefits (Figure1). But in many cases, the prevailing practice, which is regarded as the reflective plane of employer perceptions, may not match the perceptions of employees. This mismatch may arise from the misperceptions of employees also. In such a situation, there is a need to realign the management practice to a new position or reshape the perceptions of employees so as to reduce the gap between perception and practice. Thus the major task entrusted to the HRM at a workplace is to influence the perceptions of employees as well as that of the employer to arrive at a mutually agreed organisational equilibrium (from the present position), as close as possible to the absolute reality—where the work environment becomes more productive with mutual trust and contentment. Wherever the HRM succeeds in influencing and directing the two perceptions from their own subjective base towards better equilibrium, there develops an ideal and conducive work atmosphere. ✶ ✹ ✷ ✥ ✥ ✱ ✷ ✳ ✳ ✮ ✦ ✥ ✭ ✱ ✮ ✵ ✧ ✴ ✰ ✭ ✬ ✳ ✺ ✹ ✥ ✬ ✱ ✮ ✦ ✲ ✫ ★ ✸ ✥ ✱ ✮ ✦ ★ ✪ ✲ ✷ ★ ✭ ✥ ✥ ✭ ✥ ✯ ✩ ✮ ✥ ✧ ✴ ✥ ✬ ✬ ✥ ✤ ✥ ✴ ✯ ✮ ★ ✲ ✯ ✥ ✱ ✦ ✰ ✦ ✦ ✥ ✱ ✦ ✯ ✶ ✥ ✰ ✹ ✥ ★ ✦ ❉ ✗ ✒ ❃ ✗ ✙ ✖ ❁ ✓ ✜ ✢ ❀ ✜ ❄ ✙ ✗ ✒ ❅ ✓ ✒ ✘ ❀ ✜ ❃ ✗ Performance leads to success or failure. So, business is always concerned with performance. It is the end result of combining many infrastructural and attitudinal factors prevailing at the workplace. Organising and integrating all these factors in the most efficient manner is the real challenge. While it is easy to predict the outcomes of the infrastructural factors with reasonable accuracy, one may not be in a position to predict the outcome for the employees, a major performance-determining element behind these infrastructural factors, unless it is possible to control and tune their attitude. HR ✿ ◆ ❖ P ◗ ❘ ❙ ❚ ❯ ❂ ❙ ❘ ❱ ❙ ❂ ✏ ❖ ❲ ❳ ❳ ❂ ❘ ❨ ❱ ✏ ❖ ❱ ❙ ❲ ❨ ❩ ✿ ❂ ❙ ❘ ◆ ❲ ❘ ❬ ❨ ✿ ❱ ❙ ❱ ❲ ❱ ❙ ❂ ✏ 6XVWDLQDEOHHPSOR\HHDQG 2UJDQLVDWLRQDOSHUIRUPDQFH 0XWXDOWUXVW (PSOR\HHSHUFHSWLRQ 0DQDJHPHQWSUDFWLFH# 2UJDQLVDWLRQDOUHDOLW\ This uncertainty is tied up with employee perceptions about the total reward practices. Employees have every freedom to evaluate the practices of the management with their own parameters and arrive at conclusions whether it is fair or unfair, on the basis of their experience. This perceptual evaluation affects one’s mindset and influences it in a positive or negative manner. This then becomes the base for attitudinal behaviours that directly contribute to performance. So without either reshaping the perceptions of employees positively or modifying the practices, one cannot think about better and sustainable organisational performance. Figure 1 indicates that management practice must be accommodative—take care of perceptions of both employees and employer with regard to the total reward system—to ensure sustainable organisational performance. In such a practice model, both parties will be satisfied and highly bonded with mutual trust, the most potential motivator for committed performance. Successful achievement of goals through mutual cooperation leads to redefining of perceptions by both parties. This would lead to a (PSOR\HUSHUFHSWLRQ relative change in employee/employer behaviour and management practice, either positively or negatively. ❩ ❁ ✒ ✗ ❅ ✕ ❅ ✗ ❀ ✒ ✒ ✗ ❄ ✜ ✖ ✖ ✢ ✓ ✖ ✙ ✛ ✚ ✗ ✒ ✗ ✢ ❃ ✓ ✗ ✙ ❅ ✘ ✖ ❁ ✓ ❀ ✜ ✜ ❀ ✕ ❁ ✜ ✕ ✒ ✗ ❭ ❀ ✒ ❄ ✢ ❭ ❁ ✖ ✑ ✢ We can identify four styles of reward practices, positioned at four different points between employer and employee perceptions, as shown in Figure 2. „ Absolute Balance Model: In this model, the employees are optimally satisfied with their reward management system and they repose the highest level of trust in the management. Here, the reward management practice keeps equal distance from the employee and employer perceptions, even if it does not perfectly coincide with them. In such companies, the management takes utmost care for monitoring and addressing the voices of the people at work. It obviously means that the reward practice adopts an unbiased/ ethical approach. In such a model, decisionmaking and implementation become easy, especially with respect to change management. ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ 85 ▼ ■ ❏ ❑ ▲ ❏ ■ ❊ ❍ ● ❋ ❊ ❊ ❈ ❉ ❇ ❆ Developing such an industrial climate is not so easy. Trustworthy approaches of the management over a long period, along with highly transparent, two-way communication that proves their capacity to win employee trust, alone can create such an ideal atmosphere. The ‘best employers to work with’ identified by many agencies fall under this category, where the employees are treated with high dignity. Such organisations are blessed with the advantage of wonderful teamwork. „ Fair Balance Model: Here, the management shows the willingness to address the concerns of the employees and modify their reward practice to accommodate their perceptions to a great extent. In this approach, both the employees and the employer feel a fair level of contentment with respect to the reward practice and move forward with mutual trust. The management tries to set the reward practice as close as possible to the organisational reality even though it is slightly skewed towards employer perceptions. In this model, the employee-employer relationship is a healthy one, and it is an advisable model of reward management for better employee 86 ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ performance. Organisations with a fair balance reward model also will have the advantage of high team spirit and employee engagement. „ Critical Balance Model: In this style of approach, the management gives minimum attention to the voices of employees and is least bothered about their perceptions. The reward practice is set very close to employer perceptions and far away from the organisational reality. It can be considered as the threshold position beyond which the employees go out of control. At this level, the employees are either unhappy or less contented with their rewards, fixed without addressing their apprehensions. In such companies, the management just follows the statutory requirements and the laws of the land in fixing and maintaining salaries/wages. A considerable number of organisations in the present industrial scenario follow this approach. Here, the employees are less positive, or have negative attitudes towards the management. They do their job only for protecting their employment and show minimum commitment and team spirit in achieving organisational goals. HR ✿ ◆ ❖ P ◗ ❘ ❙ ❪ ❯ ◆ ❩ ◗ ❘ ❘ ❙ ❫ ❨ ❘ ❲ ❬ ❨ ❲ ❨ P ❙ ❬ ❙ ✿ ✏ ❩ ❲ ❬ ❙ ❴ ❵ ➋ ➇ ➃ ➉ ➀ ❛ ➌ ❙ ✏ ❫ ❙ ✿ ❙ ❂ ❙ ❘ ❱ ❙ ❂ ✏ ❲ ❖ ❵ ➍ ➀ ➉ ➊ ➈ ➀ ➅ ➊ )DLU ➈ 0LQLPXP ➏ ➎ ↔ ➁ ➅ ➆ ➐ ➃ ➆ ➀ ➊ ➇ → ➒ ➒ ↕ ➙ ➒ ➑ ➛ ➙ ➅ ➎ ➜ ➛ ➝ ↔ → ➒ ➒ ↕ ➙ ➒ ➑ ➛ ➙ ➞ → SHUIRUPDQFH ➜ ➛ ➝ ↔ → ➒ ➒ SHUIRUPDQFH ↕ ➜ ➛ ➙ ➒ ➑ ➛ ➙ ➝ SHUIRUPDQFH ❿ ❿ ➀ ➁ ➂ ➃ ➄ ➅ ➀ ➁ ➁ ➅ ➆ ➇ ➅ ➁ ➈ ➁ ➂ ➃ ➄ ➅ ➆ ➅ ➉ ➃ ➅ ➆ ➇ ➅ ➁ ➈ ➉ ➃ ➊ ➊ $EVROXWH %DODQFH0RGHO )DLU%DODQFH &ULWLFDO%DODQFH 0RGHO 0RGHO ([WUHPHO\ VDWLVĺHG ➑ ➒ ➓ ➔ → ➣ ➑ ➒ ➓ ➔ → ➣ ➑ 'LVVDWLVĺHG 0RGHUDWHO\ VDWLVĺHG )DLUO\ VDWLVĺHG ➑ 8QEDODQFHG 0RGHO ➑ ➒ ➓ ➔ → ➣ ➑ ➑ ➒ ➓ ➔ → ➣ ➑ ➑ ➑ ➑ ➑ (PSOR\HHELDVHG (PSOR\HUELDVHG 8QELDVHG „ ❷ ❸ ❹ ❺ ❝ ❻ ❞ ❧ ❡ ❻ ❢ ❼ ❢ ♠ ♥ ❽ ❣ ♦ ❷ ❤ ♣ ❡ q ❺ ❞ ♦ ❻ ✐ q ❥ r ❹ ❾ ❦ s ✈ ❞ t ❡ ✉ ✈ t ✇ ❼ ⑥ ✉ ✇ ⑦ ① r r s ⑧ r ② ③ ⑨ ④ q ⑤ ⑩ t q ⑧ ✉ ❶ ✇ ✇ ① Unbalanced Model: This is the worst reward management approach, in which decisions are taken by the management in an autocratic style. The reward management practice is kept close to the management perceptions with no consideration for employee perceptions and organisational reality. In this approach, the employer is never bothered about the needs and requirements of the employees and their perceptions, or even about the laws of the land. Employees, especially at the lower levels, are left with a do-or-die option, and are forced to accept the decision of the management. Here, the HRM is compelled to consider only the perceptions and interests of the employer. In organisations, which follow this approach, the employer has no direct contact with the employees. The management, caught in between, is forced to act as per the employer’s directives. In many multinational and large-scale private companies, one can see this type of reward management system. The employees are totally discontented and they have no commitment towards their employer; they work with the organisation because they have no other option. ❵ ❭ ✖ ✒ ❁ ❀ ✖ ✖ ✑ ✗ ✕ ✙ ❁ ✒ ❀ ❃ ✒ ❃ ✓ ✖ ❁ ✚ ❃ ✗ ✓ ❅ ❜ ❘ ❬ ❁ ✜ ❁ ✜ ✖ ✗ ✕ ✒ ❀ ✖ ❁ ✜ ✕ ✙ ✗ ✒ ❃ ✗ ✙ ✖ ❁ ✓ ✜ ✗ Generally, HRMs are entrusted with the responsibility of managing employee perceptions with respect to managerial practices for ensuring better employee and organisational performance. In an accommodative management style, the HR function can play a vital role in shaping the mindset of the employees by influencing their perceptions. To align the perceptions of employees with those of the employer, HRMs should have adequate mechanisms to establish and maintain continuous access to the voice of employees, and to collect and analyse their views. ✁ ✂ ✄ ✁ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ 87 HR ❲ ◆ ❖ P ◗ ❘ ❙ ➟ ❯ ✏ ❜ ❙ ◆ ✿ ◗ ❱ ✏ ❲ ✿ ❖ ❨ ❴ ✿ ❘ ❴ ❲ ❙ ◆ ❵ ❜ ❘ ❬ ❖ ❲ ❖ ❲ ✏ ❙ P ❘ ❨ ✏ ✿ ❖ P ❂ ❙ ❘ ❱ ❙ ❂ ✏ ❖ ❲ ❵ ❫ ❖ ✏ ❜ ❂ ❘ ❨ ❱ ✏ ❖ ❱ ❙ 6+50 0RGLI\ ,QĻXHQFH ➼ ➴ ➷ ➬ ➮ ➱ ➽ ➾ ➚ ➽ ➼ ➪ ➶ ➹ ➘ ➼ ➮ ❒ ❮ ❰ Ú ➚ ➪ ➶ ➚ ➽ ✃ ➴ ➴ ➱ ➾ ❒ ➷ ➷ ➬ ➮ ➱ ➷ ➱ ➱ ➮ ❒ ❮ ❰ ❒ ➬ ➮ ➱ ✃ ✃ Ï ➷ ➮ ❒ ❮ ❰ ❒ ➷ Ï Ï ❐ ❐ ❐ ➷ ➷ Ð ➷ Ð ➷ Ø ➮ ❰ Ù ➮ ❮ ❰ ➮ ❐ Ñ Ò ➱ ❒ Ñ Ò Ó Ó Ò ➷ ➷ ❮ Ô Ò Ô Ñ ❰ ➷ ➱ ❐ ➱ ➷ ➱ ❐ ❐ Ò ➷ ➮ ❰ ➱ ❒ ➷ ❮ ❐ Ñ ➽ ➾ ➚ ➽ ➼ ➪ ➶ ➹ ❐ Ò Ô Ó &KDQJHLQ &KDQJHLQ ➼ ❰ ❮ Ô ➘ ➼ ➾ Ú ➚ ➪ ➶ ➚ ➽ Õ ➮ Ò ➮ ❒ Ö ❰ ➷ × Ñ ➷ Ð ➷ ❮ Ô In a practical approach, the management practice should succeed in accommodating the perceptions of employees to the maximum possible level. To make this possible, there should be a two-way effort by HRM to influence the perceptions of employees through transparent and effective communication methods, and to modify the present management practices positively. ❱ ❷ ❸ ❹ ❺ Û ❻ ❡ Ü ❥ ♥ ❻ Ü ❥ ß ♦ ❡ â ❼ ❡ ❞ ♥ s ❽ ❢ ❷ Ý à t ❶ ❻ ❼ ❹ ❣ ✇ á s ❞ ❦ ② ✈ ③ ④ ⑦ 88 ⑤ r t ⑧ r ⑨ ✉ q ✇ ✇ ⑩ ✁ ① q ✂ ✇ ⑥ ⑧ ❶ ✄ ã ✁ ✜ ❃ ✚ ✔ ✢ ❁ ✓ ✜ The HRM has to have a reasonably good awareness about the perceptions of the employees and the employer and the measures that can be adopted to successfully catch the trust of employees, without sacrificing the trust of the ❾ Þ ❦ q ❺ ✓ ☎ ✄ ✁ ✄ ✆ ✝ ☎ ✝ ✁ ✞ ✟ ✠ ✡ ☛ ☞ ✌ ✍ ✎ employer. Aon Hewitt identified rewards and recognition as the first among the five greatest drivers of employee engagement, through a study conducted in 1,000 organisations around the globe and analysed about five million employee responses.* Last year, it was in the third position. The report expects organisations to pay more attention to understand the real and perceived pay gaps to address the issues of fairness. All these lead to the importance of managing rewards in a fair manner so as to satisfy the perceptions of employees, but without sacrificing the perceptions of employers. 5HIHUHQFH $RQ+HZLWWp ➠ ➡ ➢ ➤ ➥ ➦ ➧ ➤ ➨ ➩ ➫ ➭ ➯ ➩ ➲ ➳ ➵ ➩ ➫ ➸ ➢ ➢ ➲ ➤ ➺ ➯ ➺ ➢ ➳ ➢ ➤ ➻