By CEO Jim Annis
Gone are the days of “simple” easy-to-target advertising on three TV stations to broad segmented target markets. With thousands of cable channels, smartphones and online data, we now have microsegmentation. Microsegments aim to limit customers into very small segments — or even as individuals — which helps modern marketers determine exactly what the customer wants at every level. This has the pitfall of hyper-fragmentation. How do we reach everyone cost-effectively?
The human resources field faces similar challenges. Traditionally, there are four ways to reward people: compensation, benefits, recognition and appreciation. Individual employees used to be motivated by the standard “one size fits all” benefits plan. Now benefits are valued differently by everyone. To keep top talent in this competitive marketplace, benefits are becoming highly customized and microsegmented – even down to the individual reward level. For this hyper-segmentation, you need data and a system.
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How to start
Start with a budget. If you have $25 per employee, begin there. If you have $2,000 per employee, great! That gives you lots of flexibility to customize. Next, gather data. Human resources can use online tools like SurveyMonkey to gather individual preferences. Simply ask the question, “What would you like to receive for a job well done?” Then determine what will trigger the reward system and set a date for implementation. Individualized reward examples include a season ski pass, a rescue puppy for the SPCA supporter, Tesla charging stations, concert tickets, a monogrammed hiking backpack or REI membership, a new MacBook, cooking classes, coffee of the month club, Blue Apron/healthy delivery option, Burning Man tickets or a membership at a yoga studio. FYI: Gift cards to a bar probably will be frowned upon by your risk manager (smile).
If you are not prepared yet to customize per employee, start with a division or department. Delineate an annual “fun” budget of $1,000. Allow each to decide how to spend it on some type of team activity which can be used wither at or away from the office. At The Applied Companies, our staffing division loves to have lunch brought in. Finance loves to go to Picasso and Wine after hours. We were surprised at the diversity of uses within our small group, which validates the power of choice.
The risks of rewards
Are you trying to reward your employees or simply “fix” something? You do not give a biscuit to dog doing bad behavior. Attracting and retaining talent must be your goal. Benefits will not prevent people from job-searching or leaving; however, they do provide a nicer environment while they are there. Depending on your work culture, there could be a perception of inequality. Favoritism could rear its ugly head and employees may think they are getting less than others. It’s human nature. Take the opportunity to talk. You can motivate the people who did not receive anything by offering it as an example. “This is how you can improve” can be the opener for next steps.
New version of us
These types of benefits strategies are typical of the new HR 3.0. As an industry, we are getting away from cookie-cutter systems like performance reviews, and going to more casual, individual and continuous dialogue. You must follow the laws and ensure compensation plans are still fair, equal and gender-neutral, but you can customize rewards. This level of detail may leave you wanting to run for the hills, but if you do not want to go the way of the dinosaurs, then keeping nimble, relevant and progressive are all ways to stay competitive in the talent war.
Jim Annis is president/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Applied’s COO, contributed to this article.