VOSA is uniquely designed to target*
on VOSA Investment over 1-2 years
*Actual results may vary
What makes VOSA (Value of Service Award) so Uniquely Effective?
VOSA was the first and so far the only organization to successfully challenge this long-standing stereotype, highlighting aspects of compensation, that have a powerful emotional relevance for employees.
Compensation plays little role in Employee Retention.
- In 2022 “Inadequate Compensation” was deemed the #1 cause of Attrition by SHRM, and “Fair Compensation” was deemed the #1 cause of Retention by PwC.
- 67% Of HR professionals believe that compensation needs to be increased by 8-20%.
- How pay increases are implemented is more important than “how much” they are – it is not all about the money, but it is about making sure that pay policies recognize and fairly reward the true employee value.
The workforce challenges are temporary.
- While pandemic response exacerbated the underlying workforce trends, the challenges are neither new nor temporary.
- With 30% of new hires quitting within the first 90 days, and millions retiring early, the Great Resignation combines the older employees who are “giving up” on work, and the younger employees unwilling to offer unconditional loyalty. This is now a generational challenge.
- Disengagement in the workplace has been extremely high at ~70% in US and ~90% globally since Gallup started collecting such data about 20 years ago. Clearly nothing we tried so far has worked.
- With “Social Media Influencer” being the #1 career choice for the Millennials in 2022, it is no wonder that our essential and traditional professions are facing severe talent shortages. This will continue unless we make productive work rewarding again.
We can overcome our workforce and socio-economic challenges with the same mindset and practices that created them.
- A mentality shift as well as new tools, especially when it comes to employee compensation, are needed.
Employee Tenure has no economic value to the employer and no positive correlation with performance.
- In January 2023, Harvard Business Review published an article titled “Don’t Underestimate the Value of Employee Tenure”, which summarized key observations and conclusions from an earlier (2022) meta-study published at Oxford by Mercer-affiliated academics and practitioners, where they conclusively proved, that Employee Tenure “had a significant positive and sometimes very sizable impact on financial performance and operational excellence”.
- The study further identified two types of specific employee value correlated with tenure: General Human Capital and Firm-specific Human Capital
- Furthermore, the study concluded that traditional business models focused on encouraging Employee Tenure constitute a Competitive Advantage compared to
- VOSA is based on recognizing and fairly rewarding the economic value of the “human side” of employees, which exceeds employee “market value”, and is comprised of three major company-specific components:
- Value of proven (vs. assumed) Character
- Value of proven (vs. assumed) Role and Culture Fit
- Value of accumulating Company-Specific Knowledge (aka the “Firm-specific Human Capital”)
Paying for Performance is the best and only way to build a high-performance culture.
- While meritocracy is an important and valuable feature of the free market economies, focusing only on rewarding performance/results can have a counterproductive and often destructive long-term impact on the organizational culture and performance.
- There are at least three significant downsides to the “Pay for Performance” absolutism:
- Performance targets against which performance is usually measured are almost always set subjectively, which means they tend to carry more bias than practical value.
- Measuring performance against peers or in absolute “economic value” terms tends to overcome the limitations of measuring against targets but ignores the factors, choices, and behaviors that may have impacted performance, some of which should be further encouraged and rewarded, and others – penalized. Our corporate performance evaluation processes tend to be ineffective in consistently and objectively capturing such nuances while over-relying on subjective manager opinions.
- Performance is an outcome based on a combination of core values/character, behaviors, and motivations. Monetary motivation assigned only to the performance targets is rarely the best motivation for maximizing long-term performance (especially for “great character” employees). In contrast, a system of recognition and rewards focused on desirable core values and behaviors tends to produce better, more sustainable, and more consistent long-term results, while reducing the long-term risks from “cutting corners”, “gaming the system” and “performance at any cost” mentalities.
- Recognizing and rewarding great values, character, attitude, and behaviors you want to encourage as well as valuable accumulating company-specific knowledge and experience, will lead to better organizational performance than just focusing on rewarding performance outcomes.
- VOSA seamlesslyadds such missing reward components to your compensation policy, significantly enhancing yourorganizational performance.
Employee profit-sharing is not an effective tool for companies.
- Employee profit-sharing is the most “capitalist” form of compensation, which combines a great motivational aspect of “employee participation” without the downsides of stock ownership plans and a great overall outcome-based compensation/reward aspect often described as “shared pain, shared gain”. Employee profit-sharing also has financial agility and operational advantages to companies compared to increasing fixed compensation (salaries).
- Sharing some of the Value Created (Profit) with the key Value Creators (Employees) makes sense economically and would be considered “fair” by employees. Sharing none of it would generally be considered “unfair” and demotivational.
- So why Employee profit-sharing plans never took hold, and many studies concluded they were ineffective? Simple – most 9or perhaps all) employee profit-sharing plans had a design flaw, which led to them being morphed into today’s “Discretionary Bonus” pools, where a part of Profit is in fact shared with employees, but that is either done subjectively based on performance or is linked to existing compensation hierarchies, meaning that higher-paid employees will get a higher share of profits. Both approaches are fundamentally flawed from the Behavioral Psychology perspective, rendering them ineffective by design in achieving organization’s goals, especially when it comes to employee engagement, motivation, productivity, innovation, and learning.
- VOSA’s profit-sharing component overcomes the design flaws mentioned above and is uniquely effective.
Our Approach & Guarantee
Our unique, innovative and effective Value of Service Award (VOSA) will bring astonishing results. Yet, VOSA is not a “one size fits all” program. We will work with you to understand your situation and goals, so we can design the perfect VOSA program and implementation plan for your organization.
While actual results will vary, we can guarantee three things:
- No Financial Risk to implement: VOSA will be at minimum cost-neutral to implement (self-funding) – details of proposed cost reductions and reallocations will be provided as part of the VOSA Assessment
- Tangible Operational Improvement: VOSA will reduce your undesired Attrition by at least 50% over two years
- Significant Financial Upside: We can guarantee at least a 100% ROI on VOSA over two years for any company with an annual employee turnover above 10%
Without VOSA, the best results of other measures per Gallup’s own consulting practice top out at 30% disengagement. VOSA can close that gap to 90-100% for such good, well-run companies.
Reduce Undesired Attrition
VOSA aims to reduce undesired attrition to near-zero over the 3-5 years after implementation (retaining even those who planned to retire), and normalize into a 3-5% natural attrition rate, that can be meaningfully replenished from the bottom up.
Reduce the Need for Replacement Hiring
VOSA will reduce the need for replacement hiring to almost zero, allowing companies to focus on strategic hires and internal promotions and trainings and recruitment of the best graduates talents
Boost Employer Branding
Attain the “Employer of Choice” status with the distinctive VOSA Certification and recruit top candidates from the shrinking talent pool.
Win Back Former Employees
VOSA has a unique design feature that allows companies to easily “win back” great former employees and fill their open roles quickly
Promote Equality, Equity and Inclusion
VOSA is designed to be 100% inclusive with economically relevant and justified elements of pay equality and pay equity
Move Past “Up or Out” Mentality
VOSA is normalizing the mentality that people should be supported and encouraged to stay in roles they are most happy and productive in, instead of associating pay increase with promotions or job changes.
This change in mentality, coupled with better retention and engagement, given companies a lot more time and money to focus on promoting the right people for Manager and Leadership roles, and properly supporting those promotions with resources such as training
Narrow Pay Gaps
VOSA is designed to narrow gender and racial pay gaps from the bottom up without discrimination or social engineering
Improve Financial Agility
VOSA shifts compensation focus from salary increases to employee profit-sharing, which provides much greater financial flexibility for the VOSA clients compared to others who are stuck between a rock and a hard place trying and failing to juggle the cost of living increases with attempts to keep fixed compensation costs from spiraling out of control. Employee profit-sharing is the right compromise that also best aligns employer interests and rewards with those of employees.