As we approach the time of year end reviews, you may hear of a new concept used by human resources departments that is called the "Future Value" of employees. If it becomes widely accepted, it will change the way we look at our own individual contribution to the company and the way managers evaluate their teams.

There are two basic ways to decide salary increases. One is to give the same average percentage of increase to all employees within a certain category. The other is to define upper and lower limits for the raise and then adjust the percentage of the raise for each employee, within these limits, according to their individual performance over the last twelve months.

These two models are not always effective. Indeed, some people's performance may be so outstanding that they are above the upper limit. The company could loose them to the competition in the coming year if they are not given exceptional recognition. On the contrary, some other people may become less and less productive and will soon cost too much for what they can achieve if their salary is increased. Fast moving industries like semiconductors, computers and their peripherals are particularly sensitive to these extreme situations. Other companies that compete to attract the most outstanding human resources and provide the best quality of service like banks, securities companies or ERP consulting companies face similar difficulties. These companies must absolutely retain their top performers and cannot afford to let poor performers multiply.

How can a company lose a high performer? When another company is willing to give him bigger challenges and higher rewards. To avoid losing their champions, companies must evaluate carefully not only their past performance, but also their future value, and the compensation that their competitor would be prepared to offer to acquire their services.

The "Future Value" of an employee can be defined as  all the skills that this person can use to help the company achieve its goals in the future. In financial terms, the future value of an individual is represented by his "Market Value", which is the package that a competitor would be prepared to offer to attract this person to their team.

What makes our future value? The skills that our company needs the most. Skills that are in high demand include leadership, market vision, people development skills, team work, mastering modern information systems, a good understanding of e-commerce solutions, the ability to communicate well in English and across cultures internationally, mobility, and the ability to mix well with all kinds of people at all levels in the market. The more we possesses these skills, the higher our future value.

In Taiwan today, there is still a labor shortage in many industries. There is a tough competition among companies to hire talented individuals. This is why more and more companies focus on talent retention. They give their star performers new challenges and new learning opportunities. They give them stock options and much higher increases than their average performers. They make it difficult for the competition to offer them a bigger package. It is not easy for companies to find out what packages the competition is willing to offer. Consultants specialized in compensation and benefits can provide industry surveys. Executive search firms like ours also provide their clients with customized, updated surveys for high level positions.

Companies are starting to monitor the future value of their key persons. Then they will extend the concept progressively to their whole workforce. Some companies will eventually drop their current in-house salary scale and just use the market as reference. You are encouraged to follow this new trend and to see how it would apply to your industry. In any event, cultivating the above list of professional skills will definitely enhance your future value and therefore your market value.

Eric Dieny is President of EMS Consulting executive search firm, Chairman of the Consulting Services Committee of the American Chamber of Commerce in Taipei, and a former co-Chairman of the China Business Committee and the Labor Affairs Committee of the same Chamber.

A version of this article was published in the China Post --  the leading English newspaper in Taiwan, on November 19-20, 1999.

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