I was reading this story about GE dumping its famous (and infamous) Jack Welch baby, the stack ranking and annual performance review. That is a worthwhile topic for another day, but I was struck by a comment in the article by GE’s head of human resources, Susan Peters:
“The world isn’t really on an annual cycle anymore for anything.”
If there’s one thing that has surprised me in the past 4 years talking with the people who are responsible for managing compensation in their organizations, it’s been exactly this idea. Compensation used to be a once a year thing mostly because they had ‘always done it that way’ and it was simply the best that organizations could do given the constraints. They only had data that had been collected in ‘last year’s survey’ and it was about a year newer than the data they had used the year before, which is to say about two years old, not three. They didn’t have big data, much less fresh data to surface trends and make correlations pop out, and they certainly didn’t have cloud software tools to help them stay on top of market dynamics for pay.
Don’t get me wrong, I know that there’s a rhythm to the business calendar, and that certain things tend to happen yearly, but maybe it’s time to question why. Ten years ago the answer was the HR team and their technologies simply weren’t up to making pay changes more frequently. What’s the answer today?
You don’t have to do it that way anymore. Consider for a moment, the changes happening around us. If you live in any major city in America you are as likely to fire up Uber on your iPhone as you are to call a cab, even my parents (not spring chickens) booked their first AirBnB vacation recently rather than going to a hotel, and most of us watch ‘tv’ when we want to not when it’s ‘on’.
The world is moving faster, the traditional way of doing a lot of things is being upended, and that includes managing compensation. Talent markets are evolving very quickly. If you’re waiting 12 months to check in on what’s happening in some of your key geographies, or positions, you may be losing talent that has found a more market-informed company interested in the services of your key employees before you even realize you’re behind the market.
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