Jason-
Welcome back, and good post on fairness. I say, let’s do it!
Just a few pesky HR blind spots I want to check before we implement...
1.) The employee perception trumps ours. Whether HR thinks this is a fair place to work or not is irrelevant compared to what the employee thinks. Whether you or I think fairness (which I would suggest is about a great deal more than money) matters or not, the perception of fairness matters a great deal. People tend to leave organizations that they do not see as being fair, and if we are serious in any real way about talent then we should not want people leaving our organization because of real or perceived issues related to fairness. If we are going to pay people based on their performance it is going to be important that we do so in a very transparent manner. I would expect pay data to be made available to all employees with each employees ready and able to answer any questions regarding that data.
2.) Talent and performance are not like sugar. When we convince ourselves that we can put human performance on a scale and weight it like sugar, we are playing make believe. One of the great organizational blind spots that HR still seems to be ignorant of or simply ignoring is this flawed belief that we are good at evaluating people. We are not. We talk about it like it is a science and we spend a lot of time, money and energy on fancy software and metrics and most of this is hocus pocus. We like to pretend it is not the case, but we are, for example, still better at hiring people that we think are like us than we are at hiring the best person for the job. Things like the fundamental attribution error, cognitive biases and the Pygmalion effect skew our judgements and evaluations of others. Real diversity training has very little to do with being nice to people and a great deal to do with understanding human nature and social dynamics in order to make more reality based decisions about other human beings. I am more likely to think highly of the employee that agrees with me and is wrong than I am of the employee that disagrees with me and is right. So, we will need to make sure that we have some solid and on-going diversity training that HR professionals and business managers are supportive of, so that they are better equipped to make accurate evaluations…which is what this is about, right?
3.) We should stop assuming that we know what matters most. It is not just about money. If you stop paying me I will probably stop coming to work…if I stop coming to work you will probably stop paying me. None of that has anything to do with incentive; those are simply the parameters of our relationship. Money is certainly a part of the equation, but for every study that says pay for performance is a powerful motivator, I can show you a study that says that it is problematic. In order to avoid getting sucked into the illusion of “best practices” this should be something that is driven by employees. Let employees develop and govern how your organization rewards performance.
So, if you are in support of:
-access to pay data for the entire organization for all employees
-enthusiastic support of real, practical diversity training for all employees
-an incentive program designed by and governed by employees
…then I believe we are in complete and total agreement.