Sebastian Perrier

Why do people work? If the answer to the question is money, then why would someone with the same pay level will work harder than another? Can motivation be bought? The answer to this question is that there are extrinsic and intrinsic rewards. Payment is just one method of extrinsic rewards. There are also intrinsic rewards such as job satisfaction, sense of belonging and influence, sense of accomplishment, share of values, among other. Therefore, motivation which leads to extra-discretional effort cannot simply be empowered with additional pay.

So how important is pay? It is likely to depend on each person. This is relative to their age, qualifications, life-style, likes, culture, nation, etc. But in general, although pay is an important fact it does not have a strong impact on motivation. It is not possible to motivate people just by managing pay related reward systems. People behavior is discretional and how managers try to influence their behavior cannot lead to a standard or automatic process. So managers that try to guide their workforce just by designing reward systems will not achieve the expected result. Designing pay related reward systems is not useful to motivate people, it is a way to being fair to those who outperform for their extraeffort.

There are two steps in designing a reward system. First, what is the fixed salary level. In this aspect, fix salary levels should be enough to recruit, select and retain the employees required for each position. This fixed level should be aligned with internal (peers) and external (market) payment levels. Second, determine a variable pay which rewards effort in a way that is fair to those employees that – having the same skills set and competence than the others – over performed. Variable pay rates should have a clear purpose, which is being fair.

When designing a variable pay system, managers should have into consideration some of the following points:

• Individual or team-based rewards
• How to measure performance (qualitative + quantitative)
• Clear communication
• KISS (keep it simple and stupid)
• Avoid subjective measures
• Employees should have control over the performance measures
• Employees should have the skills, abilities and competences to achieve such goals

The management of human resources flow is about meeting current and future work force requirement while at the same time employees’ career objectives. Note that trying to also meet employees career needs is always forgotten. There are 6 steps in an organization’s human recourses flow:

1. Recruit (marketing of your company)
2. Select (find the fit of candidates to position and organization)
3. Performance evaluation
4. Training
5. Retention (motivation)
6. Redundancies

The first two steps in managing human resources flow is recruiting and selecting employees. This is the process by which organizations solicit, contact and interest potential candidates and then establishes whether or not to appoint any of them. The organization must clearly define what are the requirements for the role in terms of skills and behavior needed. Selecting is about finding a ‘fit’ with the position requirements and with the company’s culture.

But how can organizations find if someone does ‘fit’ or not? There a various different methods to assist the selection process. However, most companies use traditional interviewing. Interviewing has been an abused method in the past, and many companies selected employees only based on interviews. But interviews are in general a subjective judgment selection method. Although interviews are good in order to asses potential match between the candidate and the company’s culture, it does not cover all the areas needed to be assessed. In this sense, a multi-method approach could be better.

The next three step in managing employees flow are: performance evaluation, training and employee retention or motivation. How companies measure employees’ performance? On the one hand, the objective of the company is to influence employees’ behavior towards reaching corporate goals. And on the other hand, the objective of the employee regarding their performance evaluation is to get feedback in order to improve their professional development. Therefore, evaluating employees’ performance should not only include corporate goals, but also employees goals of professional development such as skills gained and peers feedback.

Regarding training what should managers do when new skills are required? One option thay have is to hire those new skills from employees outside the organization; thus not having to internalize the training costs. But what will happen to the remaining staff? If the company decides to fire them, it will be losing a lot of ‘social capital’ or ‘team-work’ developed among the existing work force. The relationships that are built among employees in an organization are a valuable asset for any organization. Trust among employees takes time to develop and mutual obligations that foster better work is created after they have worked together for some time. Therefore, a better option for managers is to internalize training costs in order to capitalize on the company’s social networks.

Regarding employee retention, it is interesting to raise the question: why do people leave? Again, it is not always just about money. People may leave an organization because of job specifications, fit with the company’s culture, personal reasons, external conditions (i.e. economic situation in the country), etc. Because of these factors, it can be argued that it is not really possible to try to retain all employees. So how to retain the employees? Maybe by trying to identify those key employees that the company must retain. So manager should understand what are the company needs and determine which employees to keep. Then, managers must tailor or customize programs to retain those employees for the period of time required.

This is called ‘ job-sculpting’, where managers should understand key employees deeply embedded interests. This is almost a psychological task in which manager should regularly (monthly) talk with employees about their job related interests and professional situation, and then try to adjust their positions as much as possible.

Although many processes and procedures might be written about what the human resources’ policies within a company are, peoples’ perceptions and cognitive frameworks are far more important than any written rule. So managing human resources is about managing ‘signals’ that will ultimately shape the company’s culture. If the company is sending signals consistent with the company’s policies and with people’s expectations, employees will feel identified with the company and will engage towards their objectives.

However, if the company is constantly sending contradictory messages which are inconsistent with its strategy and policies, employee loyalty and commitment will be damaged. Therefore, every action and decision taken by managers is seen and interpreted by the workforce; these signals and examples shape the organizational culture far beyond any written rule.

So why bother having any written manuals and rules? Is there a relationship between human resources practices and business performance? Why should managers bother to develop such procedures? If peoples’ behavior is a ‘black box’, where it is not possible to establish a direct relationship between processes and performance, why should managers bother writing manuals? Because empirical evidence shows that yes, there is a relationship between good human resources processes and organizational performance.

What will determine that someone will do a good job? What does ‘doing a good job’ means? Can managers develop an employment contract to answer to these questions? No!

The employment contract is different from every other contract because it is not possible to establish a direct relationship between what each party is to give. It is not like selling a product for an X amount of money. How much will the employee will give to the organization is subjective, it depends on personal discretions. The employment contract is a social relationship; each aspect of this relationship will never be able to be stipulated in a written contract.

Therefore, managing human resources is rather a balancing act than just writing contract. Reward, authority and control from the employer should be balanced with allowing the employee autonomy for creativity and personal interests. Managing human resources involves recognizing that there are potential zone of conflict of interests, and the process of managing people is a continuous act of barging and negotiations.

In this ‘balancing act’, employees interests have to be balanced with the organization’s goals. This relationship must be proactively managed and the basis to gain employees commitment; the key is to build trust. There will never be a direct relationship between the employment contract and employees behavior, this is why trust is needed to build in order to successfully meet both the organization’s and the employees interests. Employee management is about good communication and building trust.

1. PHYSICAL: train your most importan tool, your body, at least 30min a day; it’s your working machine, the more you train it, the more capacity to work it has. Three areas: aerobics, streching and tonning.
2. MENTAL: revise if the decisions that you have taken match your values, mission and vision.
3. SPIRITUAL: constantly renew your commitment to your values.
4. SOCIAL/EMOTIONAL: review your way of relating yourself with others.

1. PROACTIVITY: a leader takes ownership and responsibility of his destiny and life; his behaviour is dependant on his decisions, not on external conditions. He exercises free will decisions based on his values, a leader does not blame others for his situation, he is not controlled by the external circumstances.
2. VISION: a leader knows where he is going, has a goal in mind which is related with his values. Goals or vision is applied to different aspects of his life: family, professional, friends and social. However, a leader’s definition of success is not to reach those goals, is to work hard to try to achieve them while enjoying the journey. A leader provides direction, has the big-picture in mind. Is not tight to his history, he is only constraint by his values, beliefs and philosophy (and he is 100% committed to them).
3. MANAGEMENT SKILLS:  a leader has the skills to organize and coordinate the way to achieve the vision stated. A good leader is able to prioritize and decide what things to do first and how to do them; he manages himself, not the time (because it is impossible to manage ‘the time’). See time management matrix: pay attention to not urgent + important issues (quadrant 2). To do this, he has to be proactive to avoid urgent and important things to happen (prevent them) and he says no to the other quadrants. Quadrant 2 things to do include: planning, doing exercise, building relationships and reading.
4. OTHER: other attributes of leaders is to be emotionally inteligent and try to find solutions that benefit all parties; this is not easy and it does not imply to let your interests go: you must be brave to defent your interests, to take hard and necessary decisions and to listen and understand others. Finally, leaders must be creative in order to find new solutions and synergies.