Hardknock Realities that will affect your business and the people that will work or (don’t!) with you, in the future. Today I am looking at the Market Realties
Market
1 The Law of Demand and Supply
Economics 101: the higher the demand for labour (scarcity), the higher the remuneration offered. The higher the supply of labour (abundance), the lower the remuneration offered. It is assumed that other variables are equal. Easy in theory. In reality, this law is in a state of flux. It operates imperfectly inside organisations. Look at benchmarking. Some organisations are fixated with it. HR establishes pay levels at a certain percentile of defined benchmarks. It is stringently maintained. While they adhere to the industry remuneration levels based on demand and supply, they sabotage the business strategy and talent. The shift from remuneration to reward in the demand/supply equation is only beginning.
2 The Skills Shortage in SA
The minority camp contends there is no skills shortage. It is an “urban legend” and lacks proof. They blame white business for not wanting to employ black people. The majority camp is pressing the panic button. The skills shortage exists, is proven and goes beyond race. I submit that we are already in the vortex of skills shortages in different industries, sectors and occupations. It hurts organisational capacity, business performance and profitability. The skills shortage tide has lifted the components of reward – remuneration, career development and work-life balance to the surface.
3 Government & Regulators
Government has a colossal order: disband the legacy of apartheid, address high socio-economic inequalities, encourage foreign investment, promote economic growth, entrench law and order over crime, keep HIV in check, support the poor, overcome the politics of the day and honour promises to the masses. This order is tied to the talent market. Government has pursued controversial labour market policies, reallocated state resources in education and tackled unemployment. It has hit/miss skills development, nailed down the taxation of employment income and pushed a stringent labour regime. Government is ambitious. The regulation of healthcare and planned retirement system reform will affect millions for years to come. The crack down on corporate thieves is positive. Organisations have to manage various facets of their total reward, mindful of government direction.
4 The Trade Unions
Trade unions forever remind the country about apartheid and transformation. Trade unions champion the basic protections of employees, pay and benefit inequities and job security. The tense relationship between organisations and government, and trade unions gives expression to rolling mass action, toyi-toying and sporadic violence. Ordinary South Africans experience the fallouts from the trade unions fight for remuneration when it threatens or disrupts their access to electricity, security, healthcare, transport, fuel, education and shopping.
5 Technology
Once upon a time, the world ran on a single clock, engaged in the physical domain and hoarded information. Information technology arrived. It brought servers, computers, cell phones, software and cyberworld. Now, we live on 24 hour online clocks, surf new life in a virtual world and openly share information. Technology has irrevocably changed how we think about work, talent and reward. The quote by James Goldsmith, “if you pay peanuts, you get monkeys”, is no longer true. Talented individuals work on 100% passion and close to 0% pay. (Open source programmers, hackers, bloggers, and citizen journalists). Technology has brought work, home and vice versa. The reward arena is a beneficiary of technology. It has facilitated efficient payroll administration, benefits reporting, e-learning and performance tracking.
(Smart Reward Strategies, the book)
January 1, 2010
Reward