Can a market based pay approach, employee choice and the concept of customized rewards ever find common ground? The answer, apparently, is yes!
I've been working my way through Workforce of One, the book on talent management customization by Susan Cantrell and David Smith. As you might surmise, I have a particular interest in their ideas about reward customization. This story, about an employee-defined compensation approach, is one that I find particularly intriguing.
You might have trouble imagining how employees could set their own salaries with no organizationally imposed limits. But that's exactly what people do in the U.S. Navy. The navy has an online job-auction site where employees can bid on hard-to-fill jobs; whoever offers the lowest salary and meets the qualifications gets the job. Sometimes, this results in much higher salaries that the organization normally would define, and sometimes much lower ones. But the navy has found that the system works well to correct a long-standing problem in the service - what sailors call slamming - where personnel specialists send sailors wherever needed with organizationally defined pay, regardless of whether they want to go.
The result? This democratic, market-based system means that the navy's top performers who seek extra education and a broader range of assignments will have the opportunity to be paid more and advance more quickly on their own timetable, based on their custom-designed career paths - not the navy's. (Of course, the reverse is also true: sailors with mediocre work records or limited training will find themselves without chances for promotion.) The navy is considering eventually posting all jobs on its online job-auction site to allow all personnel to define their own pay and career paths using a market-based system.
I understand that the devil is in the details with something like this but it sure has appeal on a conceptual level.
And I'm fairly certain I've read about similar market-based systems at work out in the private sector, but I can't seem to track them down. Anybody have examples, intelligence or first-hand experience to share here?