The Human Resource Economy: Designing Incentives to Ignite ‘Passion for Excellence’
Posted in Human Resources Articles, Total Reads: 1677
, Published on 12 January 2013
Literally speaking we can call the Indian economy as the ‘Human Resources Economy’ with more conviction than most of the other countries. Raring to overtake China in actual population numbers and gearing up to be the youngest nation of the world by 2020, we, thus justify both the ‘Human’ and ‘Resource’ along with the important word ‘Economy’, which needless to mention is an accepted fact globally, that we (along with a few others) are the front-runners and flag-bearers of growth of the world economy, thus “Human Resource Economy”.
Undoubtedly, the Human Resource Managers of Indian companies thus would assume the biggest task of channelizing this young, educated and energetic work-force in a right direction so as to make the Indian growth engines gallop in full-throttle to maintain a GDP growth rate above 9%, which currently is meandering around 5.5%.
Let us look at some of the most successful businesses around the globe like Apple, Google, Infosys and many more and we find one thing in common – Passion for Excellence. Recently this statement was made by an economist at JP Morgan, saying that “iPhone 5 sales could see Apple boosting US Economy”. Imagine the power of work done with passion by human resource and the role it plays for a nation as a whole. Now, if the directors/managers of human resources, of companies in India, could even tap 1% of this potential of passion, we can imagine the boost it would give to our economy in times to come.
Now, according to the age-old theory of Economics and as quoted by a well-renowned Harvard Economics Professor Gregory Mankiw in his famous book “Principles of Economics”– People respond to Incentives. It simply means that we as human resource managers can try and unearth human passion/potential by providing employees with the right incentives, be it money, freedom for creativity, ownership etc. to bring out the best out of them. Ample examples of creative incentives are available from the above mentioned companies which surely links creative incentives to probability of success for an organization.
Apple provided free hand to their creative team with unbound restrictions to design the best phone of the world. Google demonstrated this by creating the most liberal company of the world in terms of work place ambience & work timings, where employees could literally design their own work place with all other things being taken care of. In India Infosys was the pioneer in its growing stage and understood the effect of motivation ownership provided and thus opted for the Employee Stock Option Plans (ESOP) system which was new to the Indian Environment and it did boost the productivity of the company like no other Indian IT Company at those times. Thus it’s proven that creative incentives can boost passion for excellence.
Now let’s explore the cost of exploring such creative incentives. First could be the opportunity cost of various resources of the organization like time, labour hours, money, current productivity & goals. Now creative incentives are new and thus work on trial & error basis where a continuous monitoring and frequent changes are expected in the initial period which thus affects the profitability of the organization/business unit in the short run. Thus, now those managers whose variable pay is dependent on the periodic performance & productivity of the company/business unit would not be in favor of such creative pursuits thus playing safe but depriving the company of long term success. Simply put it’s a battle between Short Run vs. Long Run decisions.
Now, the questions we got to ask are - Can the Human Resource Managers have a different approach of compensating those who dare to take the risk of trying something new for long term benefits for the organization and thus foster passion for excellence in the company culture? Is the compensation system killing creativity and thus indirectly killing the passion to achieve excellence? Can we as a ‘Human Resource Economy’ do something daring, challenging & path-breaking so as to change the complete course and speed of the Indian Economy by creating an environment which would ignite creativity and thus passion for excellence amongst the human resource capital of our organizations, our industries and thus our Nation?
This article has been authored by Shivam Bhatnagar from International School of Business & Media.
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