Free Agency, Regular Resets and Skill-Based Pay

What if you made your employees eligible to become free agents every three years?

That is the intriguing question that HR executive and blogger Andy Porter poses in a recent post over at Fistful of Talent.

Before reacting to the "insanity" of actively encouraging employees to shop around (which, let's face it, many of them are doing already), Andy encourages us to consider the benefits that an "open" (and, I would add, potentially mutually beneficial) process might bring to the table.  With this in mind, Andy highlights a number of possible outcomes of a regular free agency period:

•The employee shops their skills around to competitor organizations to get a true sense of their value
•The employee negotiates a new (better) deal with their current company and agrees to stay
•The employee finds themselves a better deal and jumps to a new company
•An employer has the opportunity not to “re-sign” a particular employee

I would add another, implicit in Andy's points above: the employer and employee have an opportunity to "reset" their relationship. A chance to assess the employee's skills and interests against the organization's current business and talent needs, to ensure that internal opportunities which may better fit the employee's capabilities and aspirations are identified at the same time that he or she considers what the outside market might have to offer, and to reset the pay arrangement based on the employee's current relevant skill set.

A reset like this could also open the door to bringing the concept of skill-based, person-centered pay into the picture as well.

Administrative challenges? Yes, I can think of quite a few.  But there are also a number of benefits, benefits that could be particularly significant for those organizations whose success hinges increasingly on continuous learning and new skill acquisition in its workforce.  Employees have a regular chance for an outside reality check (where many may find, as Andy notes, that the grass isn't necessarily greener outside their current gig).  The regular reset opportunity would also create an incentive for motivated employees to keep their skills current and pursue ongoing development of new ones.  It also brings the possibility of consequences for those who allow their knowledge and skills to languish. And, frankly, it could lay the foundation for a more agile, reality-based salary management approach than the current salary review process combined with a flurry of ill-defined market adjustments that many employers need desperately to escape.

High potential, top performers would likely find such a process to be very exciting and rewarding.

As Andy notes, even if the implementation of a true free agency program might be more than many employers can reasonably pull off, the notion of forcing an honest, transparent and regularly scheduled check-in on an employee's skills, choices and value has real merit - and should find its way into all our reward programs.

Image courtesy of zazzle.com

Comments

[E James (Jim) Brennan]

Uh... hmmm... are you and Andy implying, Ann, that people are NOT already doing this all the time? Shocked. I am shocked.

[Ann Bares]

Jim:

I think Andy's point, which I wanted to bring to this discussion, is - given that we know people are already shopping, could there be benefits to all for creating an open and transparent process. I wanted to look at his question from the standpoint of the benefits of an open reward reset.

Crazy?

Ann

[E. James (Jim) Brennan]

Not crazy but a recipe for disaster.

One can "reset" the relationship more amicably if disengagement has not already resulted from the alternate offer search. Encouraging folks to look elsewhere simply whets their appetite for bigger and better things ALWAYS available somewhere else. This process is a blatant admission that the HR function has failed or simply doesn't exist. The compensation department is supposed to carefully track outside competitive rates. The HR person in charge of personnel development (and the individual supervisor) is charged with providing effective career path planning guidance and personal growth counseling. I'll stop there.

The "formal" process smacks of solicitations for counteroffers. Just yesterday, six of the top comp people in the nation agreed that none of us had ever seen anyone stick around more than a year after receiving a counteroffer. Employers don't like to be blackmailed into doing what is right that they should have been doing on their own initiative in the first place.

Enterprises that do this regularly, ranging from sports teams to movie studios, end up with an essentially disengaged work force dedicated to personal self-interest and with minimal organizational commitment. It also guarantees the most expensive payroll for the outfit who encourages workers to seek higher bids and better deals. It might be ideal for the individual but it seems to mean death to the organization because it is corrosive to whatever mutual loyalties and commitments that now exist.

How would this work in a marriage? Think about it. The same arguments exist on both sides.

[Ann Bares]

Jim:

Good points, all with merit. And yet, I still feel that there is merit in this concept. Not a blanket, one-size-fits-all-works-this-way-in-all-cases kind of merit, but the germ of an idea from which some organizations, based on their particular talent needs and challenges, could pull some valuable insights and potential practice direction. Perhaps with more emphasis on resetting and reaffirmation (not always bad in a marriage either) and less on shopping around.

Just thoughts - thanks for sharing yours.

[Freelance Jobs in Qatar]

I’m thinking about Andy’s point that “The employee shops their skills around to competitor organizations to get a true sense of their value”. Very active point, it is right that we always want to become upgrade from other competitors and try to find out our true value of employment.