Competence Management and Rewarding

Transcription

1 Competence Management and Rewarding Moisio Elina, Hakonen Niilo, Salimäki Aino Lisbon, May 15, 2003

2 Agenda Orientation and research approach Concepts Three organisations Organisation s description Objectives for competence management How does rewarding support competence management Results and discussion

3 Research Approach in KOPA-project Organization s goals and strategy Does the reward system support the competence/knowledge management of the organization? Reward system Organizational context Competence management Isthereafit betweenthe reward system, competence management and the business strategy? Do the reward system and competence system function as intended? History Should their development focus on approach or deployment?

4 The Research Method In each case data was collected from written documents, a questionnaire and interviews. The focus was on the systems as described as well as on the way they were applied in practice. 3-6 months Modelling of the systems -a fact sheet -interviews -documents A tailored questionnaire for a sample or selected units (N = 100) Interviews (N = 10-15) Report/feedback -a summary and our recommendations

5 Objects of a Reward System Evaluation Structure of the system Effects on the targets Purpose and targets of the system Improvement processes of the system Superiors as the users of the system Achieved meaning of the system Effects on results of the work Effects on cooperation and atmosphere Organisational support to the system Effects on attitudes of employees

6 Concepts Rewarding: total rewarding including both material and non-material reward practices A Reward System the reward practices in use and the design, development and operation of them Competence and Competence Management : We used the definitions and approaches of the case organisations

7 Material and Non-Material Reward Practices Incentive pay Stock option plan Bonus plan Benefits Project rewards Base pay Special rewards Training, development, careed advancement Feedback, Appreciation Possibility to influence and participate Job security Flextime

8 Three Cases Case 1: Metal industry with heavy investments. Challenges in attracting labor and developing motivated, multi-skilled employees. Organisation carried out a strategic development project which included renewal of rewarding. Case 2: Large government organisation facing changes with EU and new information technology. Challenges also in attracting skilled labor. Carried out a renewal project for rewarding. Case 3: A business unit in a multinational IT-service organisation with competition both in the markets and on labor. Has invested in competence management and development.

9 Case 3 One business unit in a large IT-service organisation Knowledge and competence are the base of the competitive edge Competence means primarily individual person s professional skills, but more and more attention is on developing and renewing the competence of the whole personnel Competence management tools include development discussions, individual development plans, skill profiles, skill index, in-house training, job rotation etc.

10 Objectives of Competence Management and Rewarding in Case 3 Competence management objectives right competence /skills renewal job rotation, flexible use use resources personal growth Rewarding objectives employee satisfaction small turnover of employees good employer image support for business objectives

11 Case 3: Rewarding for Competence Basic pay: managers had a salary comparison tool which includes descriptions of competence levels. However managers did not use it systematically and most employees were not aware of how their basic pay is determined, or how pay raises are decided upon. Bonus pay: in most cases the bonus targets included financial performance of the company/unit, person s own objectives for the year and some objectives for development and networking. Non-monetary incentives included planning of personal development together with supervisor, concretical opportunities to participate in training programs, encouragement to learn new tasks.

12 Our Findings in Case 3 The monetary rewarding tools were not used systematically or consistently by managers. There were significant differences between departments in satisfaction with pay and assesments of the functioning of the pay system. On average the base pay and bonus pay did not direct employees behaviour as was expected. Rewarding was not linked to competence management in practice. Employees assessed the non-monetary rewards to be much more functional and being linked to the objectives for competence management. On the whole satisfaction to learning opportunities and support was high. Employees expressed suspicions for monetary incentives for learning. Job rotation did not function: both employees and managers were dissatisfied with the results. The rewarding system did not have any tool for this.

13 Summary of Case 3 The organisation needs to clarify and communicate its reward strategy: what is the purpose of each reward element. The managers need training for rewarding: theory and practice. Existing basic salary structure has opportunities to support learning but it needs to be further developed and brougt to managers as their tool. Bonus system did not function well at the moment. It could be developed to become a tool for change and learning. The employees were already eager to learn: do not overdo the incentive system!

14 Discussion on all three Cases In order to communicate the objectives for organisational competence the terminology in use must be clear. This was not so in all our cases. Also in order to reach strategic objectives for competence, the competence concept should be strategy based. The role of a manager is critical in competence based or skill based pay. The manager needs to communicate development needs and provide feedback for the individual. He/she must thoroughly understand the reward system and be able to apply it. There needs to be a balance between written instructions and managers ability/power to apply the reward system. A rigid/technical reward system without flexibility to apply is not compatible with the idea of learning. The change from traditional pay system to competence based or skill based reward system should be done within a larger organisational development framework in order to gain best results.

15 Questions?