I have often faced this debate of valuing versus recognizing employees. Though it is often used interchangeably in most discussions there is a significant difference between the two. Recognizing employees is the formal process of evaluating an employee for the work they have done. It is typically done during the performance appraisals or evaluation of an employee’s goal sheet. Valuing employees goes much beyond mere recognition, it means a commitment towards their development, success and overall welfare. Increasingly, this involves more flexible, high-performance work practices adapted to each employee having different professional and personal needs.
Valuing employee means the organization is investing in their development and growth, which in turn adds to the organizations overall performance through higher levels of organizational learning and knowledge sharing. Recognition is the measure of this investment, wherein the qualitative measures (lead indicators like training and development) are converted into quantitative measures like increased efficiency and productivity leading to higher revenues and profits.
In most organizations employee value actions like profit sharing system often become entitlements for the employees who start to expect these perks as part of the way the company does everyday business. Unless the employees, especially the new ones, are properly educated about these organizational value systems they take for granted these company provisions that were actually initiated to value people. The moment these are seen only as entitlements, the employees fail to understand its history, the basis, or the value. Major challenges in the area of valuing employees include:
1. Commitment - to the success of each employee.
2. Recognition program - that goes beyond regular compensation.
3. Career-path - development and progression within your organization.
4. Sharing organizational knowledge – to ensure that employees can better serve the customers and also contribute to achieving the strategic objectives of the organisation.
5. Creating an open work environment – encouraging risk-taking, innovation and supporting a diverse workforce.
Our organization has a three tiered compensation system that goes merely beyond recognizing employees. The first component is a fixed salary which ensures that each employee performing a certain role gets a certain amount of fixed compensation defined within a specified salary band. This ensures that there is an internal organizational equity in compensation for each role. The second component is a variable pay component which is a certain percentage of an employee’s fixed salary component. This is purely based on an individual’s past performance and is payable after the quarterly performance review. It is primarily aimed at recognizing the top performers and rewarding them accordingly; bringing a culture of meritocracy. The third component is profit sharing and is based on the company achieving a certain amount of budgeted Profit Before Tax (PBT). The entire organizational staff are eligible for this based on the company’s profitability.
Apart from the direct compensation we have other initiatives that are aimed at valuing our employees such as:
1. Mandatory and developmental training programs to increase each individual employees technical, quality and behavioral/soft skills.
2. Quarterly team outings and lunches/dinners to improve the bonding within teams
3. Extra-curricular activities (Sports and Cultural) through the Kalavedika society aimed at bringing a work-life balance and improve the morale of all employees.
4. Open cabins and the right to ‘walk-in’ for each employee. Each employee has the right to share his or her thoughts on any topic with any level of Management without any restriction or prior appointments.
5. A culture of knowledge sharing - contribution to the organizational quality database, sharing project metrics with all stakeholders, internal workshops on new technology etc.
I feel it is extremely important for individuals to bring their own personal touch to the work. Being a leading IT product development company we understand that true innovation comes when each employee brings different outlook/ideas from their diverse backgrounds. In our organization we also practice the lean philosophy of respect for individuals and the right to ask “Why” before doing any assigned tasks. This completely takes a relook at the boss-subordinate equation and brings a strong culture of participative team work where the boss plays the role of an advisor/mentor and assists the subordinate in solving his/her problem.
Knowledge (and growth) lies in the diversity of ideas. If individuals are denied the right or are not encouraged to apply their own thoughts and style to their work the growth of the individual and the organization stagnates. By allowing the employee to bring their individuality to work ensures that there is a higher level of ownership to the assigned tasks and the resultant output has a much higher level of quality and timeliness than a task which is done mechanically through pre-defined processes only. Managerial time is also saved as closed supervision is rendered unnecessary. This improves the morale of the individual and the team and automatically improves the organizational performance.
The best way the employees can add value is by taking more responsibility towards their work and becoming their own manager and work critic. A self managed team is the best thing that can happen to an organization as it frees up a lot of time for the individual and his/her manager by cutting out of lot of rework and related waste activities like formal checking and correction.
For an organization to be profitable, it requires the 3P’s – People, Processes and Physical resources (Money & Material). Out of this the hardest thing for any competitor to replicate is the “People.” The employees not only stand for the current but also the future economic value of the organization and are the only assets which do not depreciate with the passage of time. If the people are not valued properly it is highly likely that they might voluntarily move over to the competitors leading to a dilution in the company’s economic value and knowledge base. Even if employees do not leave the company their productivity, morale and ownership are likely to go down which directly might affect the organizations revenues as well as profits, a dangerous place to be in a highly competitive industry like IT.
Excerpts of this article has been published in Express Computers – http://www.expresscomputeronline.com/20090824/technologylife01.shtml
Valuing employee means the organization is investing in their development and growth, which in turn adds to the organizations overall performance through higher levels of organizational learning and knowledge sharing. Recognition is the measure of this investment, wherein the qualitative measures (lead indicators like training and development) are converted into quantitative measures like increased efficiency and productivity leading to higher revenues and profits.
In most organizations employee value actions like profit sharing system often become entitlements for the employees who start to expect these perks as part of the way the company does everyday business. Unless the employees, especially the new ones, are properly educated about these organizational value systems they take for granted these company provisions that were actually initiated to value people. The moment these are seen only as entitlements, the employees fail to understand its history, the basis, or the value. Major challenges in the area of valuing employees include:
1. Commitment - to the success of each employee.
2. Recognition program - that goes beyond regular compensation.
3. Career-path - development and progression within your organization.
4. Sharing organizational knowledge – to ensure that employees can better serve the customers and also contribute to achieving the strategic objectives of the organisation.
5. Creating an open work environment – encouraging risk-taking, innovation and supporting a diverse workforce.
Our organization has a three tiered compensation system that goes merely beyond recognizing employees. The first component is a fixed salary which ensures that each employee performing a certain role gets a certain amount of fixed compensation defined within a specified salary band. This ensures that there is an internal organizational equity in compensation for each role. The second component is a variable pay component which is a certain percentage of an employee’s fixed salary component. This is purely based on an individual’s past performance and is payable after the quarterly performance review. It is primarily aimed at recognizing the top performers and rewarding them accordingly; bringing a culture of meritocracy. The third component is profit sharing and is based on the company achieving a certain amount of budgeted Profit Before Tax (PBT). The entire organizational staff are eligible for this based on the company’s profitability.
Apart from the direct compensation we have other initiatives that are aimed at valuing our employees such as:
1. Mandatory and developmental training programs to increase each individual employees technical, quality and behavioral/soft skills.
2. Quarterly team outings and lunches/dinners to improve the bonding within teams
3. Extra-curricular activities (Sports and Cultural) through the Kalavedika society aimed at bringing a work-life balance and improve the morale of all employees.
4. Open cabins and the right to ‘walk-in’ for each employee. Each employee has the right to share his or her thoughts on any topic with any level of Management without any restriction or prior appointments.
5. A culture of knowledge sharing - contribution to the organizational quality database, sharing project metrics with all stakeholders, internal workshops on new technology etc.
I feel it is extremely important for individuals to bring their own personal touch to the work. Being a leading IT product development company we understand that true innovation comes when each employee brings different outlook/ideas from their diverse backgrounds. In our organization we also practice the lean philosophy of respect for individuals and the right to ask “Why” before doing any assigned tasks. This completely takes a relook at the boss-subordinate equation and brings a strong culture of participative team work where the boss plays the role of an advisor/mentor and assists the subordinate in solving his/her problem.
Knowledge (and growth) lies in the diversity of ideas. If individuals are denied the right or are not encouraged to apply their own thoughts and style to their work the growth of the individual and the organization stagnates. By allowing the employee to bring their individuality to work ensures that there is a higher level of ownership to the assigned tasks and the resultant output has a much higher level of quality and timeliness than a task which is done mechanically through pre-defined processes only. Managerial time is also saved as closed supervision is rendered unnecessary. This improves the morale of the individual and the team and automatically improves the organizational performance.
The best way the employees can add value is by taking more responsibility towards their work and becoming their own manager and work critic. A self managed team is the best thing that can happen to an organization as it frees up a lot of time for the individual and his/her manager by cutting out of lot of rework and related waste activities like formal checking and correction.
For an organization to be profitable, it requires the 3P’s – People, Processes and Physical resources (Money & Material). Out of this the hardest thing for any competitor to replicate is the “People.” The employees not only stand for the current but also the future economic value of the organization and are the only assets which do not depreciate with the passage of time. If the people are not valued properly it is highly likely that they might voluntarily move over to the competitors leading to a dilution in the company’s economic value and knowledge base. Even if employees do not leave the company their productivity, morale and ownership are likely to go down which directly might affect the organizations revenues as well as profits, a dangerous place to be in a highly competitive industry like IT.
Excerpts of this article has been published in Express Computers – http://www.expresscomputeronline.com/20090824/technologylife01.shtml
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