Tuesday, March 26, 2013

How US companies need to reward staff

Companies in the US and globally need to revisit compensation schemes and bonus programs to make them work how they were originally intended. Short term thinking and immediacy of rewards have created a workforce that is more self centric than at any other time in history. Jobs for life are a thing of the past, this trend has created a very scary and undesirable outcome for the employers  long term value and goals.

As shareholders care more about this quarters figures and financials instead of long term growth we see a complex knock on of effects that we will now examine.

Corporations seek non organic growth through acquisitions. This requires long term integration of systems to make the company function as a whole and cohesively in the long term.

Many companies haven't been able to do this. Boards and Executives don't receive proper reporting as systems and don't know the true financial health of their company. This doesn't allow them to make good long term decisions.

Short term payment and reward schemes are so high that Staff from Senior Executives on down are looking at a short term window of time, they will not be with the company in 4-5 years so a decision now that adds to the bottom line now gets them what they need and they really don't care about the long term effects and ramifications on the company.

This needs to change, in companies employees used to receive share options that vested in 5-10 years. This meant they cared about the long term impact of their decisions on the company otherwise they would not reap the rewards.

People now jump from company to company rising through the ranks in a more lateral than standard vertical route. Instead of learning a job, the companies philosophy and growing within a company people move company which results in continually fluctuating philosophies and goals. The only goal that can come to the fore is short term-ism and immediate profitability

Copyright Jonathan Rose 2013 - Creative Commons License Creative Commons License
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