I recently wrote a blog post about the impact of demographic shifts and how engineer’s roles are defined. As I pointed out, these demographic changes will impact dramatically how companies manage their talent pool and is happening at the same time that the “employment deal” is changing.
What is the employment deal, how is it changing, and the impact on NPD knowledge workers and management policies is the subject of this post.
So what is the employment deal and why should we be concerned about it? Well, each of us are motivated in different ways. Knowledge workers who we depend on for new product development (NPD) are no different, and in fact are more likely to be motivated by factors above and beyond just compensation, in my experience. Many of these changes to the employment deal are also being driven by how the younger worker cohort views life, a career, and the work-life balance. You can ignore how the employment deal is changing, but don’t be surprised if you have difficulty retaining key employees.
My view of the employment deal is based on five key areas:
- Flexible work arrangements
- Learning opportunities
- Compensation and benefits
- The performance management system
- The need for and benefit of engaged employees
Flexible Work Arrangements
Flexible work arrangements are important to younger, mid-career, and older workers but for different reasons. Younger workers value flexible work arrangements that can allow them to pursue other interests, mid-career workers have demands on their time with children and aging parents, and older workers may want to stay in the workforce, but value a less-demanding role. If managed properly, flexible work arrangements can be a win-win for both the employee and the company.
There are three basic options including 1) flexible time, 2) reduced time, and 3) flexible place, or telecommuting. Let’s discuss flexible time first. Flexible time can have many meanings. It might mean full flex time where workers come and go as they please with no set schedule and no defined set of core hours. It could mean flexible starting and ending times but fixed for each employee, combined with core hours say between 9 a.m. and 3 p.m. It might mean a short work week with elements of flex time. My personal preference in a team-based NPD environment is to allow flexible start and stop times, but fix them for each employee based on their needs. In addition, require that all employees be on-site between a set of core hours, say 9 a.m. to 3 p.m. I believe this communicates to the knowledge worker that they are valued and recognizes that not everyone is creative early in the morning or late at night. It also helps the company as employees are more engaged and everyone is there during the core hours for collaboration.
Reduced time is really an issue mostly for the older worker cohort who rather than retiring, would ideally like to continue to work but at a reduced schedule. It requires a company to re-think what retirement really means. As people live longer and want to stay productive, why not tap that vast knowledge pool rather than force people to retire? As I pointed out in the blog post mentioned earlier, this can also be an important way to retain specialist knowledge and mentor younger workers in the face of changing workforce demographics.
Flexible place, or telecommuting is a final option. For many types of knowledge workers, this is practical. In the world of NPD, it is certainly appropriate for software engineers, but can be applicable to all skill sets. The world of virtual work has changed dramatically and will continue to evolve. Communication and on-line collaboration tools provide new ways for geographically dispersed teams to work together. A recent Harvard Business Review article provides a good overview of how the world of virtual work is changing. To manage properly, there should be clearly defined goals for those working remotely. Unfortunately, the recent negative press about Yahoo eliminating work-at-home arrangements masks the fact that this was a management failure, and not that all work-at-home arrangements lead to lazy employees.
Knowledge workers thrive and highly value the ability to learn new skills. Companies, however, tend to do a poor job at providing these opportunities. Successful NPD over the long term demands employees who remain inquisitive and challenge the status quo. Providing opportunities for them to stretch outside their comfort zone therefore is not only valuable to the employee but good for business. Continuous learning opportunities are also good for recruiting and helps develop leadership skills so that there is more capacity and acceptance for change.
Some questions to tell if you are a “learning organization” include:
- Are you open to information or ideas that don’t fit with your perception of reality?
- Do you avoid making the same mistakes time and time again?
- Do you retain critical knowledge and not suffer when people leave?
- Do you act on what you know?
If you answered yes to all these questions, then you likely value learning, but if you answered no, then maybe you should critically look at the organization and its ability to learn.
Compensation and Benefits
Fair compensation and competitive benefits are necessary, but not sufficient to guarantee you will retain and engage employees. In addition, how each component is viewed is changing. We all know how defined benefit plans have gone away in industry having been replaced with defined contribution plans, and how companies have moved towards employee contributions to health benefit costs. Expectations for pay are also changing from tenure based, and mostly cash, to performance based with equity. Recognition and reward systems are moving away from formal and periodic to a combination of formal and informal with more “spot” rewards for a job well done. Sometimes just a simple thank you and a $100 dinner can go a long way in expanding employee engagement and job satisfaction.
Performance Management System
The compensation and benefit plans work best when they are part of a complete and coherent performance management system. Important changes are taking place here as well. The system has to make clear to employees exactly what the employment deal includes. The rewards and benefits has to be tied to measureable performance and perceived as fair. Whether you have a formal process or not, every organization has a system.
For the system to be effective, it must provide continuous, personalized reinforcement and feedback all year, not just once a year. It has to consider both financial and non-financial factors. Learning and trying new things should be rewarded, as should be judicious risk taking. Not all “failure” is bad, but can be a tremendous opportunity for the organization to learn. The system should reinforce corporate values just as the corporate values should influence how employees are expected to behave. And finally, any bonus or incentives should be at risk and not come to be viewed as an expectation.
Finally, employees want to be engaged and the good news is that engaged employees are good for business. So why do companies sometimes do such a poor job at engaging employees by making them feel good about their jobs? I believe it comes down to a company’s mistrust of its employees. If employees are satisfied with their jobs and happy, that must mean they are not under enough pressure to perform, or so the argument goes. As with everything else, a balance must be struck. There is a middle ground that benefits both the employees and the company. I recently wrote this blog post that pertains to job stress and the impact on NPD success.
So how do you foster employee engagement? First, the work by definition must be interesting and challenging to the knowledge worker. As pointed out earlier, knowledge workers greatly value learning and trying new and challenging tasks. The work must be important to the organization and lead to business success. All the important elements of the employee deal must be present. And finally, and very importantly, senior management must be engaged with NPD and understand and have empathy for the challenges of NPD. NPD is unlike any other business process. Every other process can be driven to an “algorithm”. Not NPD. Every project is different and if management does not understand and embrace this, punishing “good failure” along the way, employee engagement will suffer.
What are your thoughts and experiences? How do you view the employment deal and how it is changing? Are there particular aspects of the “deal” that are influencing your success in NPD? How is it impacting your company’s ability to retain and hire knowledge workers, and engineers in particular?
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