Total Rewards Quarterly

Rewards Conference: External Interviews

What do you think about consumerization of rewards?

While consumerization of rewards is a novel concept that forces you to think differently, it may not be feasible for organizations to consumerize rewards. Let me explain why — consumerization is notionally associated with impulse buying and it may not be ideal to associate rewards with this idea. Employee rewards is an extremely thought through process where a person is recognized for his/her contribution to an organization. However, one aspect of consumerization that resonates with my school of thought is ‘segmentation’. Segmentation will be an enabler for organizations to effectively communicate with their ‘customers’ aka employees. When there is a need to recognize a segment of the talent base in demand then this facet of consumerization is very relevant. Barring this, rewards should not be looked at as an impulsive consumerization process.

How does Mahindra Group bring in a flavor of consumerization of rewards within their reward philosophy and processes?

At Mahindra, businesses are encouraged to segment talent basis the contribution they make. Spot rewards are given to employees as a tool of immediate recognition. Rewards are linked to the type of contribution an employee makes — on a quarterly or annual basis. These rewards are over and above structured rewards. Apart from the structured annual appraisal, long-term incentives and variable pay, managers at Mahindra are encouraged to use ‘psychic rewards’. Psychic rewards impart the art of communication. Three skills namely, active listening, asking powerful questions and giving and receiving feedback make up psychic rewards. This helps managers create an emotional connect with their teams and also drives a reflective attitude among employees. Mahindra envisions itself as a reflective organization with an environment where employees are heard and the quality of conversation is of great significance. This ensures rewards are perceived differently due to the emotional connect they have with each other. Business and HR are two facets to the same coin and co-own the responsibility of connecting emotionally not only with the employees but also the consumers at large.

How relevant is consumerization of rewards for organizations today?

Consumerization is a universal theme relevant across organizations and is not only limited to corporate. Schools, for example, run on the assumption that all 11-year-olds will have peers in the same age group with similar IQ, will respond in a similar fashion to the same syllabus. Whereas it has now been established by scientific research and also widely accepted by people, that every child is unique. Some individuals are exceptionally gifted in a particular faculty or skill and yet in our education system force fitting is the norm. For half their adult life everybody is slotted into one category. Post formal education when they move into the corporate sector it is unreasonable to expect these individuals to behave in their unique way. Aspirational milestones are already conditioned into young minds on both personal and professional fronts with societal pressure thrusting choices. No wonder employees are disengaged!

It is imperative for organizations to recognize that individuals will have different motivators during different stages of their life. While most motivators for example, materialism may be important in one life stage and take a backseat in the next, the common thread that motivates individuals across stages is a sense of purpose. A feeling of knowing that the 12 hours spent at work were invested in doing something that makes them happy. As long as an organization can define a framework that aligns the organization’s goals to the varied aspirations of their employees, leaders and even vendors, it can succeed at being an alive and vibrant workplace. There is a myth hovering that leads people to believe that we must stick with a 'one-size-fits-all' in order to succeed. This model is designed for failure. Even in schools, some gifted students can channelize their innate skills and breakthrough limitations later in their professional careers. In a scenario, where organizations are striving for vibrancy, diversity in thought and brilliance. The slotting of diversity needs a paradigm shift. It is catching on with some of the forward looking organizations. Sooner than later hopefully, this will cascade among all corporate institutions.

In general opinion, consumerization of rewards is easier said than done. How can large organizations adapt to this change?

It is true that large organizations need to adhere to standardization in order to manage a large workforce. Most driving factors can however, be segregated into three or four broad buckets. These would largely differentiate various groups of people with similar aspirations, intellectual and physiological motivators and ensure while there exists standardization for hygiene, there will be a degree of individualization built into the system. Identifying individuals with a natural alignment to current opportunities for example, socially conscious individuals aligned to CSR initiatives can be another way to look at it. In Reliance Industries Ltd., when a certain section of our workforce hired for a particular role were moved to Reliance Foundation that aligned much better to these individuals, they were seen to thrive in a way nobody saw coming! Agility in thought that fosters nurturing of talent is a unique leadership trait. Much like a gardener, a leader that believes in nurturing talent would provide adequate space, resources and drive away ‘pests’ to ensure his plants are healthy. The shift in the style of leadership required now, calls for a leader who can create an environment which experiments and create a conducive atmosphere for young saplings to grow into strong, unique trees. The gardener approach will not only ensure the growth but also timely elimination of dead plants or any another entity that hinders growth. Young professionals want to explore different opportunities and grow at their own pace and models of the past cannot cater to this need.

As a behavioural economist, what is the key take away for organizations looking at consumerization of rewards?

Behavioural economics studies the way decisions are made instead of how decisions should be made. It studies behaviours beyond rationality and takes into account the bias people may have that influences perceptions and decision-making. A thought to begin with is the fact that people’s relationship with their employers is not transactional, the engagement is emotional. This is where behavioural economics can help organizations understand how to engage better with tools and techniques. The employee-employer relationship is heavily dependent on their behaviour towards each other. Comfort with status quo is the primary reason for resistance to change. This could be contributed to the fact that we value our losses more than the gains we may incur. It’s important to understand how people are currently valuing their current benefits in their mental account. Psychologically people do not see money as a single entity, they classify it in different pools and treat these pools differently. It is important for organizations to align these pools and ensure that changes are made in a way that do not make people uncomfortable due to the apparent visible shift in these pools for example, loss from a pool they value dearly and gain in a pool that lies low in their preference is bound to cause some grievance, while the loss and gain may monetarily be of the same value!


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