David Creelman

Abraham Harrison LLC is a fairly new company (2007) in a fairly new industry (social media) and, being new, its HR practices reflect what made sense to them rather than conventional wisdom. What makes sense in compensation is not to focus on the traditional elements of reward, but on the specific things that matter most to individual employees. CEO Mark Harrison describes this as paying in the currency that employees’ value.

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How does it work?
One employee wants stability, time for family and fun projects—Harrison sets up the responsibilities to achieve that. Another leader wants power, respect and responsibility—all of those can be catered to. A third wants to work at home, work nights and be treated as a skilled professional and not a servant—all easy currency to deliver in this Internet-based world.

None of this is strange; these are all standard human desires. People may want to be creative, to be routine, to be protected from mundane tasks, to feel they are supported, to have a flexible schedule and so on. The important thing is that each individual is different and, if you pay them in the currency of their individual needs, you get loyalty and engagement.

What is money for?

Beyond the minimum of having enough to pay the rent, people want money to allow them to live a certain lifestyle or, too often, as compensation for living a lifestyle they despise. But what if your work, by its very nature, allows you the lifestyle you want?

In Harrison’s case he wants freedom, specifically the freedom to live half the year in Berlin and half in Mauritius. As an entrepreneur in an Internet-based business he can do that. How much would some organization who wanted Harrison to work in a cubicle have to pay to compensate for the loss of that freedom? He is being paid in the currency of freedom and that far outweighs the value that could be paid in paper money.

If an organization can pay people in the currency they value, then they can give employees much more while spending less.

Is This Model Scalable?

It is easy for a small organization to treat each worker as an individual. If you have 1,000 employees, can HR be expected to craft individual deals with each one? The answer is clearly no. But, individual managers can. A manager can strive to find out just what would be most motivating to each individual and arrange the work to make that possible. In fact, your good managers try to do this already, even where it’s frowned upon.

HR needs to do two things. One is to educate managers in the value of finding out what individual employees really want. The other is that HR has to learn to be “the yes, we can find a way to make that work” department. Instead of shutting this kind of flexibility down, HR has to enable it.

There are practical limits, but any attempt to move in this direction can improve retention and engagement. It can reduce the pressure to continually increase compensation and it may also be the key to attracting star employees.

The Challenges

The nature of this approach to compensation is that the fundamental deal is between the manager and the employee, not the firm and the employee. This means that if one manager thinks it’s essential for his or her employees to wear suits, while another thinks beachwear is fine, then we will have employees facing different rules. Is this unfair? It all depends on how employees understand the deal. If they recognize that the deal is between an individual and their manager then they’ll recognize the rules a different manager sets are not their business.

What about having some corporate rules on, for example, dress code? Yes, that’s possible but as soon as you do that you are restricting a manager’s ability to pay employees in the currency they value, which may be wearing flip-flops in the office. Corporate rules need to be kept to a minimum.

The Bottom Line

A small, free-spirited, entrepreneurial firm like Abraham Harrison can take this concept of paying people in the currency they value to the limit. Large organizations with a legacy of systems and expectations will be much more constrained. But you don’t need to go to the limit to start reaping benefits. Simply allowing managers to craft individual deals with employees will allow them to improve. You’ll find managers already do this but it’s covert. By consciously recognizing this compensation principle you’ll get more value.
 

David Creelman is CEO of Creelman Research providing writing, research and commentary on human capital management.   He is investing much of his time in helping organizations report on human capital. He works with a variety of academics, think tanks, consultancies and HR vendors in the US, Japan, Canada and China. Learn more at www.creelmanresearch.com.