HR Management, Talent Management

Resetting the Organization: What if Your Employees Became Free Agents?

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What if you made your employees eligible to become free agents every three years?

That is the intriguing question that HR executive and blogger Andy Porter poses in a recent post over at Fistful of Talent.

Before reacting to the “insanity” of actively encouraging employees to shop around (which, let’s face it, many of them are doing already), Andy encourages us to consider the benefits that an “open” (and, I would add, potentially mutually beneficial) process might bring to the table. With this in mind, Andy highlights a number of possible outcomes of a regular free agency period:

  • The employee shops their skills around to competitor organizations to get a true sense of their value.
  • The employee negotiates a new (better) deal with their current company and agrees to stay.
  • The employee finds themselves a better deal and jumps to a new company.
  • An employer has the opportunity not to “re-sign” a particular employee.

“Resetting” the relationship

I would add another, implicit in Andy’s points above: the employer and employee have an opportunity to “reset” their relationship. A chance to assess the employee’s skills and interests against the organization’s current business and talent needs, to ensure that internal opportunities which may better fit the employee’s capabilities and aspirations are identified at the same time that he or she considers what the outside market might have to offer, and to reset the pay arrangement based on the employee’s current relevant skill set.

A reset like this could also open the door to bringing the concept of skill-based, person-centered pay into the picture as well.

Administrative challenges? Yes, I can think of quite a few. But there are also a number of benefits, benefits that could be particularly significant for those organizations whose success hinges increasingly on continuous learning and new skill acquisition in its workforce.

Employees have a regular chance for an outside reality check (where many may find, as Andy notes, that the grass isn’t necessarily greener outside their current gig). The regular reset opportunity would also create an incentive for motivated employees to keep their skills current and pursue ongoing development of new ones. It also brings the possibility of consequences for those who allow their knowledge and skills to languish.

A better approach?

And, frankly, it could lay the foundation for a more agile, reality-based salary management approach than the current salary review process combined with a flurry of ill-defined market adjustments that many employers need desperately to escape.

High potential, top performers would likely find such a process to be very exciting and rewarding.

As Andy notes, even if the implementation of a true free agency program might be more than many employers can reasonably pull off, the notion of forcing an honest, transparent and regularly scheduled check-in on an employee’s skills, choices and value has real merit – and should find its way into all our reward programs.

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems. Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University. Contact her at abares@alturaconsultinggroup.com.
  • http://www.hroomph.com/ Alan Miles

     I love it when people turn conventional thinking on its head – and this proposal certainly does.

    But, as Anne says, businesses might struggle to cope with the administrative challenge.  And I’d imagine that unions might have an opinion too.

    If one objective is to provide an ‘incentive for motivated employees to keep their skills current and pursue ongoing development of new ones’, then every three years isn’t particularly ‘current’ in my book, not when the whole business environment can change every two weeks.

    And if another is to bring in an ‘agile, reality-based salary management approach’ … well, does it need to be so difficult?

    All we need to do is think out of the box in a different way, and introduce the principle of ongoing quality assurance into the management of people.  If we jettisoned the job description and replaced it with an achievement plan, defining what people are expected to deliver, objectively and precisely, then we could review progress easily and regularly.  Out would go annual appraisals, to be replaced by frequent, lightweight self-appraisals and reviews.  Skills (and processes!) could be addressed as the need arose rather than long after the event, targets fine-tuned as business needs shifted.  And salary reviews would no longer be based on the ‘final exam’ but on ongoing contribution, based on the facts rather than opinions.

    A small shift in a document we take for granted could change everything.