Corporate America taking new view on compensation .
Anne Murray
NEW YORK 1996-08-23
Corporate America is planning major changes in employee compensation in the next few years , according to a recent study .
What it comes down to is this : If you 're highly skilled , you 'll benefit nicely .
But if you 're not and cannot contribute to your employer 's goals , you 'll be paid less .
The survey , conducted in late 1995 and the early part of this year by management consulting firm Towers Perrin , showed that the focus will be on an employee 's overall value to the company 's bottom line -- rather than how well an employee performs a specific task .
Presently , for example , if an accountant 's job involves doing five specific tasks , he or she can expect a certain salary , said Sandra O'Neal , a Towers Perrin principal .
In the future , the accountant will be evaluated solely on " knowledge , skill and abilities , " she said .
In addition to using accounting skills , the accountant will also have to be creative , work well in a team , be sensitive to customer needs and set productivity goals .
" The good news is , if you 're highly skilled and have many abilities , you 'll be paid more , " said O'Neal .
" The bad news is , if you 're not skilled and ca n't contribute to a team , to customer service and the organisation 's goals , you 'll be paid less . "
Of the 750 mid-to-large size corporations surveyed , 81 percent had undergone a major restructuring in the last three years , and more than two-thirds reported that productivity and profits were up as result .
Next on the agenda for these firms is developing a new compensation structure , and 78 percent report that they are considering a new , skills-based plan for both management and non-management employees .
This coming shift , O'Neal said , " is not just isolated or a fad .
It 's an inexorable change . "
After World War II , corporations adopted a " military model " creating hierarchical organisations where " the concept of defined tasks worked great , " she said .
But as the economy became global , customers were more demanding and problems became more complex .
" Multi-layers kept management at a distance from its customers , " O'Neal said .
Now organisations must change to stay competitive .
O'Neal says firms will place a greater emphasis on teams and team performance in giving raises .
If your team does well , you 'll do well .
If it does n't do well , do n't expect a raise .
Is this fair to an employee who can go the distance but is on a team that ca n't keep up ?
" That 's an important question we used to ask a lot , " said O'Neal . "
It 's not a question we ask any more .
The more important question is -- ' Do we have results ? '
"
To get those results , 27 percent of the companies surveyed plan to eliminate base pay increases in favour of cash bonuses and incentives , such as employee and team award programmes and education .
Companies that can change their culture and view employees as business partners will do well , O'Neal said .
For example , the survey rated some participants in the survey as " high-performing " companies , based on their return on equity above 16 percent .
Those companies also said they already offer employees variable pay and business education , give their managers more control over pay decisions and celebrate employee and team success .
" They respect employees more , they trust employees more and they value their employees more , " O'Neal said .
" The key to success at high-performance companies is engaging employees in a business partnership .
It will improve a company 's bottom line . "