Peak Performance: When Agile Meets Reward

According to author Thomas Friedman, we’re living in the age of accelerations. And as executives grapple with disruption in their particular niche, they are heralding agility as a must-have trait. What emerged strongly in Mercer’s 2019 Global Talent Trends Study is that C-suite executives believe their businesses need to be innovative and nimble to win in such a dynamic environment, a measure against which they believe they are making progress: 30% of executives describe their organization as change-agile, up from 18% in 2018.

Agile, high performing teams are part of this new vision of work. Evidence suggests agile ways of working improve operational efficiency and stakeholder satisfaction with the outcomes. Yet, if executives have the chequered flag of agile in their sights, they need support to assemble a pit crew and to convince people to get in the car.

Thus far, HR has been too slow at moving into the agile fast lane. How can HR help form agile teams quicker, particularly as they penetrate all parts of the organisation and even HR itself? And for rewards practitioners, how do we motivate the behaviour change required of agile teams?

An agile team, or squad, is a temporary, self-organising group of people from different disciplines with different experiences. This way of working requires high levels of trust, teamwork and an openness to experiment.

Agile teams set up quickly, move with speed and disband fast. They need to establish connections between team members rapidly. This is where digital comes in. Unlike the hierarchical models of the past, organisations are moving towards a new platform for talent approach that matches skill supply creatively with work demand and enables dynamic teams to connect in real time.

Enhanced data and analytics fuel the talent platform, and this data comes from multiple sources, including HRIS systems or cloud-based productivity and collaboration software. Access to good information about talent and skills supply – within the company and in the broader talent ecosystem – allows HR to match up the best teams, while just-in-time feedback reveals whether the matching is working. We are witnessing a shift in how HR can add value – be it automating feedback collection, or making performance reviews portable via blockchain. But more needs to be done to understand employees’ preferences; today, less than two-thirds of workers believe their company understands their true skill sets and interests, which is crucial to forming passionate and capable teams.

Agile working raises fundamental questions for reward professionals. What should be rewarded? Should agile working be rewarded differently? Current reward practice tends to focus on the individual – their qualifications, experience and unique performance (although 54% of employees say creating team goals would help them perform better at work ). In contrast, agile principles tend to emphasise different attributes, such as collaboration, learning and collective intelligence; and they elevate the team’s achievement above the individual’s.

In this vein, agile teams and managers are testing perceived reward policy wisdoms. New mantras are emerging to reinforce the right behaviours. For example, one Mercer client is testing a dual approach, where the team’s achievement is rewarded by assigning part of the reward equally to all members of the squad, while the other part is assigned according to the individual’s role in a tribe (business unit) or chapter (function) using a peer recognition system. Thus the case for change is starting to take hold. In a recent Mercer snapshot poll, 55% of reward professionals said an increased emphasis on team contribution within incentives would be most effective in driving stronger pay for performance outcomes.

In short, we are seeing three shifts in reward policy: towards agile working having its own aligned reward arrangements, towards team reward, and a re-examination of differentiated individual rewards.

While the results of such experiments are coming in, we also need to consider:

  • How does performance management work in this environment? Is it needed at all?
  • Should reward be different for different levels, indeed are there different levels in this environment?
  • Who makes reward decisions for the individual? Are these decisions made by the team?
  • What happens when colleagues leave agile teams and return to their previous divisions? Do they revert to the prior reward policy?
  • Should colleagues be incentivised through reward? What other elements of the value proposition may be appropriate, such as opportunities for advancement? Is the incentive itself the team’s work and working practices?

Agile working provokes challenging questions to which we need provocative answers if we want to build a workforce for the future at a speed that matches executives’ appetite for agility and growth. If we get this right, we can accelerate our enterprise’s (and our employees’) ability to thrive.

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About Mercer

Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. For more information visit https://www.mercer.com/

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