s and workers, essential link in the transformation of companies towards the new model of the inclusive economy

By Jorge A. Silva, head of Wadhwani Advantage LATAM

s and workers, essential link in the transformation of companies towards the new model of the inclusive economy
s and workers, essential link in the transformation of companies towards the new model of the inclusive economy

If the only constant is change, and in order to adapt to it, we need to shift our perspective from one extreme to the other, in times of pandemic we monitor employers and employees “pull” On the same page, there have been few cases in which both of them perceived their own interests through empathy. This situation will prevail and must be sustained with paid work during the indispensable return of business productivity.

In the main programs that emerged exprofeso to protect employment, there were a multitude of complications which, although not successfully avoided in all cases, reflected the tacit agreement to guard the worker and his family. This situation clearly reflects the vision of various authors who need to expand the scope of the business value proposition and establish it as the main factor in reducing social inequality within the so-called new model of the inclusive economy.

There is no end to uncertainty and we don’t even know how far we are from a stable environmentCountries like India were then tragically hit by a period of relative calm that requires planning, taking into account adverse scenarios such as a return to economic activity without the necessary health care or in the face of depressed manufacturing activity.

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Salary and its relationship to productivity

Within the labor trends that accelerated during the pandemic, it is useful to consider remuneration systems that clearly reward the employee’s performance for their contribution to the creation of value in the company he works for. Traditionally, SMEs have found collaborative relationships that are a means of improving their competitiveness. However, when we see how they can get in touch with their workers, certain practices are common that discourage the company from associating themselves closely with them, such as cutting spending more heavily or subsidizing board bonuses when the salaries of the operating staff are low and differentiated compensation models lost sight of those that stimulate the productivity of their employees.

The path to value creation through remuneration

By definition, a salary is a fixed value for work and is determined by a market wage rate for similar jobs in similar industries in a region, which is usually influenced by the supply of available labor. As part of a new work design and corporate purpose, the salary can be compensated with part of the generated value, which appears to be a solid mechanism for the stability and growth of the company.

Since it is a strategic definition, the steps that will allow it to be properly implemented are as follows:

  1. Strategy review. Whether documented or not, periodically reviewed or with no management involvement, it exists and therefore it is of particular importance to understand how it will be influenced in the new context. Scenario management becomes relevant.
  2. Choose an alternate action, Due to the complexity involved, however, one has to decide to close the gap between the current state of the company and its target state, be it adaptation, reconfiguration and / or transformation. Ultimately, it comes down to the emphasis on action, and this is where the interests of the company and those of the employees should be reconciled through productivity-oriented compensation agreements.
  3. Work with your team to define the goals, operational plan, and measure their progress. In order to generate the desired value, we need to establish the goals that drive the results to later link them to the goals that the organizational skills enable, ie the “how” and “with what they can be achieved”.
  4. Measure the efficiency of execution with technological assistance. Technology adoption is likely the challenge that can transform the business model itself, and in the case of staff, it requires new and greater skills that require investment in training and follow-up. Adaptation goes even deeper for both the company and the employee, as both require the acquisition of new skills.

The previous steps are implemented by confirming that within your organization you are aligned with the strategy you are proposing, focused on your vision, and taking a performance measurement, within a culture that emphasizes execution.

Align jobs with strategy

Based on the premise that we want to synchronize salary with productivity, it goes without saying that we want to make remuneration variable instead of fixed costs, in other words We have to show employees why it is good for them to want their employer to earn more. This is achieved through remuneration models, the design of which creates incentives to exploit future profits from the cooperation between the contracting parties.

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In the above design, the negotiation of individual and team results is necessary and the following is useful for this:

  1. Communicate how the worker’s work contributes to the strategy, Sometimes general metrics are used that may not be the goal of the work in and of themselves. Think of the value that collecting and interpreting data currently has leading to frustration and poor pay. Who should the strategy be communicated to?
  2. Clearly set remuneration criteria. Depending on the work, a greater or lesser weight can be determined for the individual and collective contribution; in any case, planning, supervision during the term of the work, performance evaluations and the elasticity of the increase in performance must be clearly defined. Remuneration.
  3. Motivate innovation, that is, ask for constant feedback in order to make learning improvements.


Naturally, in the face of an unusual situation like the pandemic, companies stressed their efforts to protect their workers’ employment, even though the external context called for harsher alternatives such as termination of employment. This implied the acceleration of new forms of connection between companies and workers, which is why new remuneration systems are now also required and the linkage of remuneration to employee performance is a viable alternative which, if properly implemented, will help you manage the risks taken at the beginning of the crisis to compensate.

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