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The Future of Compensation is Crowdsourced

By Derek Irvine

Compensation Cafe blog logoRecognize This! – Shifting a portion of compensation to the crowd is one way companies can ensure greater effectiveness and alignment to performance.

The transformation of performance reviews is a topic increasingly top of mind for many HR professionals. One of the major driving forces is the changing nature of performance itself. Whether you view it through the lens of the gig economy, teams-based organizing, or the knowledge economy, performance in modern organizations is simultaneously becoming more fluid and complex.

Compensation practices have sometimes lagged behind these changes. Companies can easily find themselves in the position of just throwing money at the dual challenges of attracting and retaining talent, and also increasing motivation and engagement. All without seeing much actual return.

Moving forward, companies seeking to maintain a competitive advantage will need to find ways of more effectively leveraging compensation. Turning to the crowd can be one way that compensation and performance can be more aligned.

As I wrote in a post earlier this week on Compensation Cafe, crowdsourced compensation allows a company to move its investments closer to the contributions that individual employees are making.

Here are four reasons, excerpted from that post, making the case for companies to consider shifting more of their compensation portfolios to crowdsourced methods:

  1. It creates a strong connection for each employee, linking specific behaviors and accomplishments to overall group success and the broader organization.

  2. It creates a culture of performance where the emphasis is not only on what one contributes, but also on recognizing the contributions of others.

  3. It is better able to acknowledge the performance that comes from teams and groups, following the projects and teams that form and reform throughout the year.

  4. It helps an organization attract top talent, signaling the importance the organization places on creating a human workplace and creating an ownership mentality among employees for performance.

As performance itself becomes a more dynamic phenomenon, compensation practices must evolve to keep pace and allow the organization to sustain competitive advantage.

What are your thoughts on the changing nature of performance and compensation?

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