Should Idiosyncratic Deals Be Part of Total Rewards?

by David Creelman | Posted | Total Rewards

Should Idiosyncratic Deals Be Part of Total Rewards?

I can just imagine how a compensation manager would react to the idea that we should encourage people managers to set up idiosyncratic "one off" deals for certain employees.

After all, the whole point of the compensation and reward system is to create a fair, consistent and administratively manageable structure.

However, research by Dr. Denise Rousseau of Carnegie-Mellon suggests that idiosyncratic deals, or “i-deals” as she calls them, are a good tactic—or at least, they're a good tactic in the right circumstances.

The heart of i-deals — and compensation managers will be pleased to hear this — is not in changing pay. More often i-deals involve where someone works, the range of projects they work on, or when they work. They're a special accommodation to the particular needs of a valued employee.

This may sound like some mix of flex hours and telecommuting, but Rousseau draws a bright line between programs that are available to all employees and i-deals. If it's a general program, then that fits within the normal course of events; Rousseau wants us to focus on the times we should do something abnormal.

Why do something abnormal?

Imagine that a seasoned analyst has been flying from Toronto to Halifax every weekend to help out her elderly parents. Finally the travel takes its toll and the analyst tells her manager she’s going to have to quit.

The manager then proposes an i-deal: move to Halifax, work remotely, but come in for team meetings once a month. The company cannot afford to have everyone scattered in different cities, but in this one case it makes sense.

A special deal—like letting the boss’ son get away with a two-hour lunch—is not an i-deal. An i-deal has to be something that's a win-win—good for the employee and good for the company. The case of retaining this analyst is an i-deal; nepotism is not.

Can we manage the downsides of i-deals?

Using i-deals raise two issues: complexity and fairness. In both cases these are manageable because they get handled at the level of the individual manager, not at the level of the compensation and reward system. If a manager says it’s ok for an employee to work from their home in Zurich, or take a sabbatical for 12 months, or only work on projects that involve nanotechnology, then it's up to them to manage the impact on work; HR need never see it.

For the manager, they need to focus on what Rousseau calls the triangle of justice. The points in the triangle are the employer, the individual and their coworkers. Everyone must feel this a fair deal.

The most difficult point of the triangle is the coworker. For an i-deal to be successful the manager has to work out how the deal might impact the other workers and make sure it doesn’t harm them.

It’s not just about what happens on a regular day. The manager has to think “What happens in a rush?” “What happens if a few co-workers fall sick?” "Can we make arrangements such that the benefit to the individual getting the i-deal does not put a burden others?"

That’s most of the answer to making i-deals work, but not the whole one.

Avoiding “begrudery” when giving idiosyncratic deals

The Irish have a useful word: “begrudery”. It means resenting someone else’s good fortune.

In the case of an i-deal, begrudery is less likely if two conditions are in place:

  • If the team sees the i-deal as evidence that the employer cares about people and is flexible. In that case they can see how this attitude could someday benefit them.
  • If the recipient of the i-deal is liked and the reason why this employee needs the i-deal is seen as legitimate. It’s far easier to make an i-deal seem appropriate if someone is caring for sick parents, versus because that individual likes to go sailing.

If there is a good reason, and that reason is communicated effectively, co-workers will support an i-deal.

What is HR’s role?

This is not about a generalized way to improve employee engagement, it's about giving managers a tool to help retain or motivate a valuable employee without trying to bribe them with a large pay increase. HR can help managers by letting them know that i-deals are an option, and the conditions that will make an i-deal work.

(To learn more get Denise Rousseau’s book I-deals, Idiosyncratic Deals Employees Bargain for Themselves.)

Your Turn: Does your organization use “i-deals”? Share your stories.

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