Yes, that was the question he asked me.
As an HR Generalist consultant, I have had the pleasure of working with managers with different mindsets. This client was a Ghanaian-British who was starting a business in Ghana. As an international investor, he needed @Bentinarly service for business start-up and human resource management. Oh! I was so happy to see how he reflected my value-based approach to rewards management. Quick to recount the dignity of labour as applicable for rewards management, he made my job seem done before it even started (lolz!). Whilst the focus of my article today is not rewards management in international HRM; a subfield of HR that covers the management of employee welfare in different countries which are applied in international companies, I am writing on the right mindset/approach for compensation management. I’m not sharing formulas to calculate salaries; I am sharing what built the right formula to calculate salaries. Because it is easy to apply a formula wrongly if you don’t understand the purpose.
Your mindset should be value-based, not cost-based.
As the Great Resignation continues to see people quitting jobs for work flexibility, better rewards, incentives, and reasons critical to holistic well-being, prompting them to prioritize mental health and their families, especially amongst junior-middle level who are primarily Gen Z’ers and millennials born into economic crisis and advanced technology era, the human experience management world is evolving fast. This #labourtalk show biz is getting super interesting!
What nobody probably tells you about rewards management is that it is more strategic than subjective. With many success stories on the value-based approach as a win-win approach for the company and the people, let’s boggle our minds a little bit.
8 ASSUMPTIONS/QUESTIONS TO BUILD A VALUE-BASED REWARDS MANAGEMENT SYSTEM
- Rewards management is NOT ALL ABOUT MONEY. It is everything people receive in return for their efforts.
- The needs of employers and employees are the same – growth
- What’s the ratio of your labour cost compared to your total revenue or profit? Human capital management is recognizing that people more than ‘things’ are responsible for your growth.
- Do you pay people based on value or cost? Employees will find a psychological equilibrium to reduce/increase output to the value of what you give them.
- People do less what they receive less? I agree with Adam Stacy’s equity theory that everyone seeks to find an equilibrium between their input (what they give the company) and their output (what the company gives back to them)
- The team you invest in is the team that brings your harvest
- The team you build is the engine that drives your organization to its envisioned place
- Be strategic. Be people-focused. Be concerned!
| Cost-based | Value-based |
| Pay people what you want to pay them | Pay people according to the value they bring |
| Employees are liabilities | Employees are assets |
| Labour cost is expensive | Labour cost is an investment |
| It is all about profit | It is all about the people |
| Sales are what makes the company grow | Successful employees make a successful business |
| Marketing is a specific team | Every employee is the company’s marketer |
| Profit is for things | Profit is shared for the people |
| Employees are tools for exploitation | Employees are the company’s (internal) customers |
| The short-term effect on profitability | Long term effect on profitability |