Equitable vs. Equal Employee Rewards * Critical on a Global Scale

It’s important to ensure employees are rewarded equally around the world, right?

Wrong. Rather, it’s important to ensure employees are rewarded equitably around the world.

Compensation Café guest contributor Jacque Vilet wrote last week on the challenges of “consistency” in global compensation saying, in part:

“I showed him [a new manager of a globally dispersed team] survey data for each country so he could see how his employees’ salaries compared to the same jobs in that market.   I told him that the issue of ‘consistency’ does not mean that we pay employees in the same job the same salary worldwide.   It just means that we pay employees competitively in their own country.”

This is no less true in employee rewards. As part of a well rounded Total Rewards program, employee recognition that includes rewards must keep in mind three critical equitable factors:

1. Equitable reward participation – Too many recognition and reward programs limit program participants by any number of factors. Perhaps incentive programs are the only form of “recognition,” but only open to sales or customer service reps. More typically, only the top 10% of “elite” performers are recognized for their efforts while the 70% in the middle are left to wonder if their contributions are valued or even necessary.
   
   Most common of all, however, are recognition and reward programs limited to the employees located in the same country as company headquarters. This leaves employees in other global locations feeling like second-class citizens and eliminates any possibility of creating one culture of recognition and appreciation across the entire organization.
   
   How to do it: all employees should be eligible to participate in a true recognition program in which anyone can express their appreciation for colleagues and their efforts that reflect the company values.
2. Equitable reward values – Like Jacque explained with global compensation, many organizations believe simple currency conversion of reward value delivers an equitable reward solution. This approach ignores the fact that $100 in the US buys a certain amount of goods and services. That same $100, converted to Indian Rupees (for example), would buy exponentially more goods and services. Equal rewards certainly are not equitable.
   
   How to do it: Integrate local standard-of-living considerations to ensure reward options are equitable in local purchasing power. Doing say can save up to 50% of program budget investment while achieving desired goals.
3. Equitable reward options – All employees, regardless of global location, should have an equitable choice of rewards. Little is more fraught with the opportunity for international insult than employee rewards – even those with the best of intentions. A comment from Jose Santiago on a recent post of mine illustrates this point well:
   
   “I’ll give you a classic example that often happens in international companies with stock options and grants as part of the reward. A colleague of mine some years ago did not want the options because of tax issues relating to the way his country dealt with options (he had to hold them for 3 years, but needed to pay tax in the year of issue!), so he rejected this “benefit” several times. We never got a solution as the group refused to understand the issue.”
   
   How to do it: Don’t force on your employees rewards you think are appropriate and meaningful. Trust your employees to know their own minds – and their own desires – and let them choose the rewards they’ve always dreamed of from brands they know and trust in their own neighborhoods or anywhere in the world.

What other challenges have you seen with global reward programs?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin, Montreal and Boston. Follow Derek on Twitter at @globoforce.

Comments

[Laura Schroeder]

So true! If there's one consistent message comp cafe has it's look at the full picture. On the other hand, if you're working somewhere the reward has more value you have more incentive to perform. We used to really scramble to get those referral bonuses back when the German currency was the Deutschmark... ah, good times.

[Derek Irvine, Globoforce]

Thanks, Laura. Ah, the trials of euro conversion (and they continue). I'm honored to be part of this team because until there is full understanding of the complete breadth and depth of TOTAL Rewards, then the conversation is always more difficult than it needs to be.

[Employee Loyalty Program]

Incentives absolutely don’t take the place of managing, thus the old principle: Don’t make a management problem into a compensation problem. This is especially crucial during a recession. Getting your employees fully energized and committed is a relationship (management) issue, not a compensation issue.

[Ana]

nice post here!!!