There are disturbing signs that the Human Resource community is losing more of what little relevance it holds today. Even as tradecraft veterans increasingly endorse open transparency in reward systems and recommend robust communications about compensation as the desired best practice, the consensus actual practice is moving away from that ideal.
The most recent study by the global professional society that focuses on Total Rewards is depressing. It indicates that the profession charged with the responsibility of providing effective consequences for worker behavior is not producing results that live up to its ideals. Employers are increasingly failing to explain their salaries to individuals. Confusion about compensation is spreading.
More and more organizations are reporting that only minimal information is shared with employees regarding individual salaries. In 2014, this number reached more than a third (39%).
In addition, the number of organizations admitting that most employees don’t understand their compensation philosophy rose to 46% in 2014. Almost half? Yikes!
Heck, if employees failed to meet their individual objectives as badly as compensation people seem to have fumbled the ball, they would get stern rebukes, critical performance reviews, remedial action plans and downgraded performance appraisal ratings. No bonuses, either!
Most experienced Total Reward professionals agree that transparency is A Good Thing, healthy and positive for all. This conclusion is based on reality rather than just academic theory. Studies and conference workshop presentations routinely reveal that the sunshine of exposure kills the toxic germs of skepticism and suspicion. When information about reward program design and delivery is shared with employees, challenges become less frequent and general morale improves. Whatever is hidden immediately becomes suspect, while what is openly revealed is presumed safe and non-threatening (or management wouldn’t let it be shown).
Yet companies seems to be moving farther and farther away from the approaches considered ideal by HR folk. The desired improvement towards best practice seems to be stifled in favor of a blind adoption of the most common custom. One problem is that what is seen to be the most popular method at any given moment is often not the best option for the future. Another recurring issue is the weakness of HR when it lacks a strong voice “at the big table” where top management makes its critical decisions.
If employers continue moving backwards towards more compensation secrecy, it suggests that either we are wrong about what is "best" or the key decision makers simply disagree and ignore us. Both possibilities are bad. The accelerating trend towards the suppression of transparency shows we are losing the communication battle. The simultaneously growing ignorance of employees about their enterprise’s compensation intentions proves that damage has been done. Potential backlashes are building up. Many HR people may be flailing in frustrated futility even while while isolated islands of excellent achievement find themselves pounded by tidal waves of indifference.
What will it take to change this disturbing status quo situation? Recognition of the issue is necessary before anything can change. Nothing ignored can be corrected. Now you know about it, so you can take action.
In all professions, there are leaders, there are followers and there are the hopelessly lost. Which will you be?
E. James (Jim) Brennan was Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. After over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), serves on the Advisory Board of the Compensation and Benefits Review and will express his opinion on almost anything.
Creative Commons image "Lefty Clock" by RBertelg