“Neo-Reward Management” in the aftermath of Covid-19(84)

It is undeniable that total reward (compensation) policy is an indispensable derivative and natural ramification of dominant economic approach of the relevant period similar to capital accumulation, rental gain and interest rates. With a concise view to IPE history, shall one argue that developmental path of conservative and liberal economy in different paths and intensity enabled emergence of hourly wage together with surplus value coinciding with working hours. That inclination was reshaped and reformed via managed and floating working hours, complimentary social security mechanism as a byproduct of nation-state and monthly salary payments through the rise of middle class, so called “white collar” employees particularly in the post-second world war. Rise of social state in so-called “Golden years” until mid-1970s also provided favorable circumstances for labor in general to provide additional dimensions for spendable income, social welfare benefits beside base/basic salary mostly owing to balance of power in the international realm and bargaining strategy of stakeholders at negotiation table. The fallacy of social welfare state in détente era complimented with costly regional wars and oil prices brought about an end to single/strong focus on base salary and procurement power of the labor by early 1980s. The devastating impact of currency and oil crises fostered by globalization made companies to keep profitability and competitive power by stressing on cost thereby base salary of labor. Such a shift from Keynesian understanding of supporting cost of living of labor and community welfare to neo-liberal way of diversification of labor in artificially segmented layers inevitably questioned the relative weightiness of variable pay on performance vis a vis guarantee payment of base salary.?

In that context, we witnessed annual bonus as a derivative policy of target total cash particularly started with top-executives mostly effecting corporate performance (BSC) of the company. Moreover, shrinking of nation-state for the sake of “liberty” through globalization resulted in decreasing in public policy instruments and budgetary expenses for health, education and retirement with the intense frequency of privatizations. That shift in social and public policy paved the way for companies to create innovative private health insurance, education support, pension plans for employees to provide a certain degree of security whilst keeping qualified labor in competitive market conditions. Hence, rise of fringe benefits as a statutory portion of total reward management emerged in that globalized context in which state is no longer major actor but rather those companies with utmost social responsibility for a “sustainable” future. Accordingly, the addition of both annual (short-term incentive) bonus and fringe benefits are a correlated result of declining rates of profitability, increasing complexity of competition and shrinking legitimacy and power of nation state.

What about future of total reward in pandemic era of 2020s? To answer that question, our elaboration of the evolution of neo-liberalism and globalism will be a key determinant. In fact, we experienced a fastening process of poverty, deregulation and escalating level of income gap since 2000s. Despite the fact that, so called perceived dream was prosperity in a global village with freedom via end of ideology, the history proved the opposite by presenting unsustainable discrepancy in power relations thus menacing even liberal democracy. Considering that Covid-19’s impact on unprecedented transition of humanity for digital and financial “surveillance capitalism”, it is not easy to foresee a prosperous and participative total reward strategy for commonwealth and general will. At that point, one can expect four major inclination in total reward structure for 2020s and beyond.

In the first place, it is expected that high level of structural and sticky unemployment could not be digested by labor market in the short term. That reality inevitably bring “universal basic income” as a fundamental base salary policy for the companies. That is also case for state’s unemployment insurance and income as well. That’s to say, corporations will provide certain level of minimum wage for the employees for cost of living and basic needs to keep a sustainable and available labor force whenever necessary depending on the fluctuated demand in the market. The form of universal basic income could be in the form of loyalty coupons or cash inflow via payroll. Mutual shareholder structure between corporations and state can also be designed to provide such a hygiene base salary structure.

Secondly, as a substantial result of “flexible and remote” work, pay for only working days and certain allowances for internet, utility, housing could be provided by companies depending on transitory conditions regulated with segmented job contracts. Thus, separation of labor, agile form of total cash structures could be designed based on statutory definition of job and time. New total cash will be a calculation of universal basic income and these allowances with the second’s overwhelming domination in the total cash budget vis a vis basic salary. Long-term incentives will lose its differentiating power of 2000s simply owing to cost of living, procurement power and short-term priorities of labor.

Thirdly, as far as fringe benefits are concerned, with the increasing privatization of social security institutions and decline of public spending for community, employees will be funding their individual health and pension while actively working. Thus, we can witness employee selected individualized health, life insurances and pension plans rather that rigid corporate plans offered by companies. That’s also valid for employee’s family and dependents. The increasing importance of flexible benefits and gift cards to support purchasing power of labor will be a vital factor in competitive market.?

Finally, most of the employees will be out of regular full time corporate payroll but rather providing invoice as consultants. Thus, working for more than one employer, multi-task and hourly time based wage management could rise as a result of contingency in labor market. It is also worthless to say that, all salary payment will be in crypto-digital currency as we all will be citizens of “cashless society”.

Consequently, shock therapy experiments on humanity since 9/11 are still on the way with further attacks on financial security, health, income and life of the world citizens in different forms and functions. Negotiation power of labor vis a vis other stakeholders capital are at lowest levels. Collectivism is overwhelmingly replaced and dominated by artificially pumped individualism, egoism in the form of liberty and innovation.

The question might be than, to what extent a “competitive” total reward strategy relying on “valuable” segmentation with a higher rate of variable pay and flexible benefits dynamics based on individual performance results could be a permanent solution for real social-economic problems of?employees whether white or blue collar? In that juncture, do we really need to continue measuring employee satisfaction or engagement with surveys? Answer could more possibly no, particularly in cashless society guarded with artificial perceptions full of insecure expectations and pre-sales of future dreams.