Compensation Cafe

He Said / She Said Is Always Expensive

Recently I was asked by a U.S. client why I recommended that they create an international assignment letter for their expatriate employees.  After all, they only had a few employees overseas and previously had resisted the call to “play the lawyer card.” They felt that management could effectively deal with the circumstances of expatriate situations as matters came up, and were reluctant to lose what they considered their prerogative – to set terms and conditions as they thought appropriate for each employee.

This is not the first time I've been asked that question, as it's not unusual for small companies or non-profit organizations to send an employee overseas with little more than a verbal agreement and a series of vague assurances.  These organizations wish to avoid bureaucracy and move quickly.  However, often these casual and hurried arrangements have proved painful and expensive experiences:

• The shock faced when coming to grips with actually living in a foreign country, vs. visiting.  The realities of daily life, combined with cultural differences compared against “back home” become quite a wake-up call when no longer insulated by the transitory nature of a business or vacation trip.

• The constancy of unforeseen and confusing local situations (medical claims, driving licenses, bank accounts, schooling, language, etc.) proved such a frustrating distraction that employees lost focus on the job – the reason they were there in the first place.

• Relationships with headquarters suffered as the employee asked for repeated consideration (increased payments) to redress what they considered coverage gaps in their terms & conditions.  The trust element was weakened as employees felt they were being short-changed by management.

Coming from an environment where every expatriate was given a detailed assignment letter “before” getting on the plane, I was at first taken aback by the client’s question – because the absence of mutually agreed terms and conditions is almost certain to prove expensive to companies trying to take a “short cut.”

So why is providing an assignment letter a good idea?

• Protection:  Like any contract, confirming the terms & conditions of the assignment protect both parties from misunderstandings, misinterpretations and assumptions – before expenses are incurred.

• Clarity:  Accepting an overseas assignment is a major step for any employee, as well as for family members.  The more you clarify the terms and conditions of the assignment, the more likely you are to ensure a smooth assignment for all parties.

• Cost control:  Defines expenses that the company will pay for and conversely what they will not.  An agreement here will mitigate issues rising once the expatriate is on the ground in the host country.  Concerns raised once the assignee is relocated usually result in increased company costs, as negotiating leverage is lost and the company feels compelled to avoid alienating an expensive investment.

• Standardization:  Your international policy should strive to treat expatriates in the same fashion.  Unique circumstances do occur but the basic principles should be followed for every assignee.

So how bad can it be, playing it by ear and leaving terms & conditions to be developed over the duration of an employee’s assignment?  Aren't flexibility and quick thinking positive management traits?

Yes, but when courting the inherent risks that accompany an undocumented assignment, you should be prepared for:

• Higher and unbudgeted costs.

• Frequent negotiations to improve the expat's situation.

• Disgruntled assignees and / or affected family members.

• Greater risk of failed assignment.

Short cuts usually limits the financial and emotional protection the employee and their family will rely on, while the company has committed  substantial monies to place them overseas.  That is not a good management practice.

Terms and Conditions

When preparing an international assignment letter, the following  key elements should be included.

• Title, compensation and assignment duration – critical elements of status and reward in the host country.

• Housing and cost of living allowance – should include the amounts involved and frequency of review.

• Benefit coverage (medical, dental, life, vacation, holidays etc.) – how will home country benefit protections be handled in the host country.

• Relocation –coverage for the employee’s home country residence, to include overseas movement of household goods.

• Property management (as applicable) – what will happen to the home country residence?

• Tax preparation – employee obligations in both countries.  Usually a statement of company liability for “additional” taxes.

• Home leave – how often, and under what circumstances?

• Schooling, language, cultural orientation (as applicable).

• Repatriation – a balance is usually struck here between the employee’s strong concern and the company’s natural vagueness for what the future might bring.

The items listed above represent only a portion of the questions that your expatriate candidate will have.   So should your company consider taking a casual approach to sending an employee overseas, unsupported by a signed assignment letter, be aware of the risks involved.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Creative Commons image courtesy of the DC Art Museum

HR Doesn't Like Doing Compensation: It's a Big Deal!

Editor's Note: Today's post comes to us courtesy of guest contributor Jacque Vilet.

In a recent Cafe post, Ann Bares presents survey results compiled by Sharlyn Lauby, who blogs as HR Bartender.  The survey results show that:

• HR spends a lot time on compensation today and doesn’t like it.
• HR  would prefer to spend their time on any other HR area than compensation.

Ann raises the question of what this tells us about HR and whether it’s an issue we should be concerned about.

My opinion is “yes”; we should be concerned.  And I will respond to the issue of compensation specifically as well as what this bodes for HR’s future:

1) Why is the compensation role important?
2) What will become of HR in the future if it doesn’t learn to apply some of the same skills to their new HR role in the “new normal”?

Number 1 --- Why is the compensation role important?

HR has traditionally focused on soft skills and transactional activities --- employee relations, training and development, and recruiting.  Even compensation was conducted in a transactional manner through survey participation.  It  focused on keeping employee pay in line with competitors.   

Today compensation is viewed differently by top management.  Now it even has the attention of  the Board of Directors.   HR is having to respond to this interest in ways they have never had to before.

Let’s look at some ways the compensation role has changed:

1) Labor cost is one of the largest, if not the largest, company expense.   Labor costs range from 35% of revenues in manufacturing companies to about 70% in professional services companies.     This is not “chump” change.    In the past, companies would agonize over a decision to spend $100,000 for a computer system and ignore labor cost.   The only person remotely interested was the CFO who monitored labor cost as a percent of revenues --- or whatever metric the company used to limit labor cost.

Result:  HR needs to understand how labor cost is spent, if it is spent wisely, are there other more creative ways to spend the same amount of money and how to model different ways it could be changed to meet various business situations.

2) Compensation has received a lot of attention in the past few years due to the layoffs associated with the economic downturn.   We now are beginning to read about the resurgence of “flexible compensation” and the possibility that companies may keep base salaries flat and use variable comp as the way to compensate employees.   Competitive practices are becoming less important.  Demographics are playing a role with four distinct age groups in the workplace, each with differing wants/needs. 
 
Result:  HR needs to create and offer an array of compensation options to employees using the same amount of money to satisfy the wants/needs of these different demographic groups.  If competitive practices are no longer so important, HR needs to better understand the business and build compensation packages for different groups to reflect their value to the business strategy.   In other words, one size doesn’t fit all employee groups.

3) The Board of Directors is more involved in executive compensation now due to the Dodd-Frank Act.  They are expecting HR to provide competitive information on executive compensation.

Result:  HR must be able to analyze not only what the competition pays but also some options on how best to reward the CEO using different components of salary and short/long-term incentives.

Number 2:  What will become of HR in the future if it doesn’t learn to use some of the same skills that are required in the compensation role in their role in the “new normal”?:

It doesn’t really matter what HR wants/doesn’t want to do.   The reality is that the world has changed and HR has not. 

Let’s look at some alarming data from some experts on how HR in general measures up to the new standards that are being imposed on them. 

Studies from McKinsey & Co. and Hewitt suggest that many managers believe HR still lacks the capability to develop strategies aligned with business objectives.    These studies polled CEOs and found that 58 percent of them said HR lacks business acumen.

The need for business acumen is viewed as one of the top HR skills needed today.   And business acumen is most clearly linked to the kind of skills used in the compensation role.  Among other things, HR needs to design compensation  programs that are going to incent employees in enabling the company to meet its business strategy.  

HR needs to be able to solve compensation problems like this one:

“Health care costs are up. I don't have as much money to spend on this plan.   I need to take money from some other plan.  But which one?   How do I put it all together?  And, by the way, I'm in 137 countries with demographic groups ranging in age from 19 to 73. How do I work that all out?”

Solving a problem like this requires some good strategic and analytical thinking. . . . and some number-crunching.

This is just one example.   Cost analysis, modeling and analytics that link directly to the bottom line are becoming an important HR function.   And those skills link back to some of the same ones used in the compensation role.

Business requires it.  The future of HR depends on it. 

Jacque Vilet, President of Vilet International has over 20 years’ experience in International Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology.    She has worked with both local nationals and expatriates and has been an expat twice during her career.    Jacque holds the CCP, GPHR and SWP (Human Capital Institute).  She is a member of WorldatWork,  Society of Human Resources Management and the Human Capital Institute.   She is co-chair of the Global HR professional emphasis group for the Dallas chapter of SHRM.  She is a regular contributor to HCI, HR.com and IHR Forum.

Image courtesy of www.publicradio.org/columns/marketplace/money-blog/2011/03

Lunch at the Compensation Cafe: Understanding International Rewards

International compensation is a challenge that a growing number of HR and reward professionals must face.  Simply extending what you do in the US to overseas locations doesn't work.  It's much more than a difference in language and currency.  Every country is distinct, not only in terms employment laws, tax codes and economic forces, but even in their attitude toward work and pay.  And when you step out past Western Europe. . . the differences can be stark.

Join the Compensation Café team's global rewards experts - Chuck Csizmar and Laura Schroeder - and me on Tuesday, November 15, 11:00 to 11:45 Pacific Time,for Episode 5 of our new roundtable series and a caffeinated conversation about this important topic.

You will learn:

1) Why analyzing international compensation is different.

2) How to deal with the challenge of varying statutory and regulatory obligations.

3) Advice on managing international compensation, whether you are a global company, a US firm with international operations, or just a small time player with a limited employee footprint overseas.

For more information and to register, please go to the event page, hosted by Focus.com.

You can follow the event on ourTwitter stream at #CompCafe as well as on the Focus event page, where you can comment, ask questions and chat - so that the conversation can go on beyond the 45 minute live discussion.  If you are unable to join the live event, a recording of the session in .MP3 format will be posted to the event page within 24 hours - and a written transcript will be available within the following week.

We're looking forward to a great conversation - and hope you'll join us!

Hate to Do Performance Reviews? Does It Matter?

Can you remember how you felt the last time you did a performance review? Or how you felt about writing objectives?

Those feelings are the reality of the performance management process. Even if you are a member of the minority who believes in performance management, you've got to admit that it's not much fun.

So why treat performance management as if it were some soulless analytic process? Ignoring attitude just makes the relationship more complicated. (Ask any parent of teenagers!)

When it comes time to exhort managers to schedule a) 30 minutes for each appraisal discussions or b) an hour for a team briefing on 2012 strategy and objectives, recognize that checklists aren't going to be enough to influence their behavior.

Make this messy, inefficient process simpler, by all means. It's a demonstration of respect and your effort will be noticed. But also address the feelings of irritation, confusion, personal inadequacy and so on. 

Most corporate training and communications seem like public service commercials. Write it SMART. Use an action verb.

Wouldn't you be more likely have an impact if you dealt with the feelings of:

• Irritation over the time commitment -- by providing techniques for managing the time efficiently?
• Antagonism that it's a waste of time -- by providing case studies on how admired companies handle business planning? Better yet, a case study of one of your own departments that improved through planning and measurement?
• Confusion about the "art" of the process -- by briefing managers on the basics of strategic planning like gap analysis and business drivers, so they know how to talk over strategy alignment with employees.
• Inadequacy about the interpersonal aspect of leadership -- by encouraging managers to speak openly about the difficulties they have had, so they can commiserate and encourage each other?
• Distrust of corporate commitment -- by actually doing what you say. Corporate classics are saying performance management is important and then making other things priorities . . . promoting individuals who are terrible at performance management . . . insisting performance management is a strategic necessity but not providing a way to align objectives vertically, audit the alignment, calibrate ratings and so on.

These are thoughts, not recipes. Brainstorm your own ideas for your managers. Just don't give up because the whole thing feels frustrating. If it were fun and easy, we would have put this one to bed a long time ago.

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.

Holiday Business Gifts Policy ;-)

As the holiday season approaches, those who remain active as compensation consultants may find the following policy helpful, or at least amusing.  Although it has been years since I last issued it, this policy, traditionally sent out in early Fall, was always extremely well received by consulting clients.  Since I don’t do any consulting anymore, feel free to adapt it for your own use.

TO:  BTA Clients and Friends

FROM:  BTA Business Ethics Committee

RE:  Reminder of Client Premiums/Business Gifts Policy

With the holiday season rapidly approaching, this is an appropriate time for a reminder regarding the long-standing policy of Brennan, Thomsen Associates, Inc., with regard to client premiums or business gifts.

It is the policy of Brennan, Thomsen Associates, Inc., to encourage employees of the Company to so impress clients that those clients will freely offer gifts or services of tangible value (in addition to their prompt payment of BTA invoices) as a demonstration of their esteem.

The BTA Business Ethics Committee views ingratiating attempts as sincere indications of honest appreciation for our expert professional services whose value so greatly exceeds the paltry fees we charge.  While we do not need and do not solicit holiday gifts, we actively seek to so completely convince our clients of the exceptional cost effectiveness of our services that those clients are inspired to display overt signs of professional respect.  We won't accept expensive gifts, but we really do appreciate the respect it indicates.

Of course, since it is our business to see that our clients have excellent pay systems, our contacts at client firms generally have no need for gifts from us to supplement their official compensation, which we endeavor to maintain at eminently fair and equitable levels.  In other words, we do not send gifts.  Client contacts have found that the quality of the services we provide are quite sufficient to assure their personal income growth and continued career success without the need for special supplements.

BTA is very proud of the relationships we have with our clients and others with whom we do business.  Through your recognition of (and compliance with) our Business Gifts Policy, we can all look forward to many more years of mutual success and growth.

Thank you very much for your understanding and cooperation in this matter.

Somewhat sincerely,

BUSINESS ETHICS COMMITTEE
E. James Brennan, President
Gloria M. Wall, Vice President

E. James (Jim) Brennan  is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired 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.) and will express his opinion on almost anything.

Image courtesy of embroideredideas.com

Competition Is Good, Except When It’s Not: The Difference between Incentives and Recognition

I’m often asked, “What’s the difference between incentives and recognition? Aren’t they the same thing?”

No, they are not. Incentives and recognition are two distinctly different mechanisms that can be used to boost employee productivity, but each has its proper place and time for use. Incentives in particular can cause unintended consequences if not thought through fully.

A recent LA Times article provides an excellent example of incentives in the form of leaderboards gone awry.

“In the basements of the Disneyland and Paradise Pier hotels in Anaheim, big flat-screen monitors hang from the walls in rooms where uniformed crews do laundry. The monitors are like scoreboards, with employees' work speeds compared to one another. Workers are listed by name, so their colleagues can see who is quickest at loading pillow cases, sheets and other items into a laundry machine. …

“Isabel Barrera, a Disneyland Hotel laundry worker for eight years, began calling the new system the ‘electronic whip’ when it was installed last year. The name has stuck. … According to Barrera, the whip has led to a sort of competition among workers, some of whom have tried to race to the head of the pack. But that has led to dissension and made other employees worry that a reasonable pace won't be enough to keep the boss happy. Barrera and Beatriz Topete, an official with Unite Here Local 11, said employees have been known to skip bathroom breaks out of fear that their production will fall and managers will demand an explanation. They say they felt bad for a pregnant employee who had trouble keeping up.”

The Difference between Incentives and Recognition

The chart below illustrates the primary differences between incentives and recognition.

Most importantly, incentives are focused on the “What” while recognition is focused on the “How.” For example, the laundry scoreboards are purely an incentive focused on the “what” of employee deliverable of number of pillow cases loaded into a machine, etc. Recognition, on the other hand, would perhaps praise and reward Beatriz for chipping in to help her pregnant colleague keep up with the work but still take needed bathroom breaks. In this example, Beatriz is being recognized for “how” she is getting her work done.

Ensure Incentives Remain on Track

1. Set reasonable parameters and expectations. Competition can be an effective motivator as long as employees don’t believe their jobs are on the line based on the outcome. Overcome this challenge by setting clear goals at the outset and sticking to them.
2. Take into account individual employee situations. To be fair, incentives must take into account individual exceptions (such as the pregnant employee at Disney). No employee should ever feel as if they need to put their health or well-being in danger to meet incentive expectations. This is often the primary problem with safety incentive programs in which employees simply do not report safety issues to ensure they will meet safety goals.
3. Don’t rely solely on incentives. Incentives serve a purpose for motivating teams to meet or exceed short-term, highly visible goals. But necessarily only a few employees will benefit. Recognition, properly implemented, is designed to reach the vast majority of employees, acknowledging and praising employees frequently and in the moment for actions and behaviors to demonstrate core values and contribute to key objectives.

Do you use incentives or recognition in your workplace? Which do you find more effective?

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.

Don't Be Fair - Be Consistent!

Discrimination and fairness... They're really just different sides of the same coin, right? Or are they?

You could argue, as my fellow Café contributor Jim Brennan did, that they're the same side of the same coin. In his last post, More Discrimination Is Needed, Jim made an excellent point:

The very act of discrimination can be either bad or good, because some differences must be ignored while other distinctions should be noted.

I couldn't agree more. The meaning of the word discrimination has gone through a transformation. People automatically think of "the unjust or prejudicial treatment of different categories of people or things, especially on the grounds of race, age or sex" rather than "recognition and understanding of the difference between one thing and another". Semantics often gets in the way when the word "discrimination" comes up.

Jim goes on to say that:

Discrimination is needed to create pay equity. It not only involves comparable worth but also includes perceptions of fair treatment by all employees. 

Here's where things get complicated. "Discrimination" is objective; to use Jim's example, it's important to differentiate between "positive contributors and feckless shirkers". Presumably there's some objective measurable thing that allows us to make this differentiation (e.g., sales volume, average serving time per customer, number of calls fielded per hour, etc.). If the compensation strategy is tied to this objective measurable thing, then the strategy automatically differentiates between the "good performers" and the "bad performers". 

"Fairness" is subjective. What seems unfair to me may seem fair to you. If I'm a bad performer and you're a good performer, I may view a compensation strategy tied to sales volume, for example, as unfair. I put in the same amount of hours as you do, and I'm working hard and doing my best - just like you are. But I sell less than you do because I get all of the crappy sales leads and you get all of the good ones. It's not fair that I get stuck with the crappy leads, and it's not fair that I get paid less than you do even though I'm working just as hard as you.

Fairness depends on our perceptions, and perceptions of the same situation can vary wildly from person to person. So, rather than aiming for fairness in your compensation strategy, deciding which family member takes the dog out for her morning walk, or in anything you do, aim for consistency. Consistency is the key.

My friend Steve Browne made a great point on my podcast about fairness and consistency:

Podcast Powered By Podbean

So don't be fair - be consistent! Set your policies and procedures based on legitimate factors that don't discriminate on the basis of age, gender, race, ethnicity or other protected characteristic, and apply those policies and procedures in a consistent manner. As Steve said, if you're consistent, you end up being more fair than you ever were. 

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics and is the host of The Proactive Employer Podcast. Follow her on Twitter at ProactiveStats.

Slaying The Job Evaluation Dinosaur

Job Evaluation:  an assessment of job tasks and responsibilities in order to create a top-to-bottom hierarchy reflective of the relative value that the company places upon its jobs.

Throughout my Compensation career I have never enjoyed having to evaluate jobs.  Quite the opposite.  As soon as I progressed high enough in my organization I delegated responsibility to a subordinate and washed my hands of it.  Job evaluation is a thankless task, with the evaluator subject to criticism from all sides.

• If you agree with an evaluation request, you are only admitting to the obvious.

• If you disagree and value the job different (lower), you clearly do not understand the key duties and responsibilities.

• The subjective nature of the process is viewed with suspicion by everyone.

• Job evaluators do not receive Christmas cards.

In spite of my disdain for the process the act of evaluating jobs has been found useful by companies since the 1930's.

• They need a method to establish a hierarchy of job importance (A is bigger than B, B is bigger than C, etc.).

• They need to explain the relationship of jobs, one to another (A is how much bigger than B?).

• They want to set employee expectations and manage the Reward process (price the jobs).

Job Evaluation does have other purposes as well.  The internal assessment sets career progression steps and assists with organizational development (which jobs are necessary).  It also allows the company to avoid criticism that the competitive labor market (external forces) has dictated which jobs should be paid more or less than others.

Despite these worthy contributions the criticism of the process continues to come from many directions:

• Job descriptions are often poorly written, with content manipulated by managers to gain advantage.

• Pressure is often brought to bear on the Evaluator to increase (almost never the opposite) a rating.

• Evaluation language, forms  and procedures are often complicated and confusing to employees and managers alike.

• Senior management support for the integrity of the process is often limited.

• Employees are skeptical of an inherently subjective process where decisions are made by someone from outside their functional area.

For those who use a job evaluation process (whole job or quantitative), a further step of valuation is to place a price tag on each position - and to do that you need to conduct a study of the competitive marketplace.

Market Pricing

Here is the one process that gets you straight to the core of the matter - placing a monetary value on your jobs.  Some of its advantages as an evaluation process are:

• It is more objective, especially if using multiple survey sources.

• It is easier for management to accept, vs. the judgment of “some analyst in HR.”

• It is easier to defend results to otherwise biased managers.

• The evaluator is subject to less criticism (a personal favorite).

Most companies follow both processes, job evaluation and then market pricing.  Does that two-phased effort add value?  I have my doubts, especially if the prime goal is to establish a salary structure.

Sometimes the competitive market conflicts with your hierarchy.

What if the marketplace indicates a job is worth @$50,000, but as a result of your evaluation process the current midpoint is either much higher or much lower?  Ignoring the market could prove costly, in terms of either dollars or employee disengagement.  But if you follow competitive practice – then what is the point of your internal, job content-based evaluation process?

When faced with a choice most companies would make the change.   Dealing with reality, they would say.  So at the end of the day the true indicator of the value placed on your hierarchy is through market pricing.

Another concern is that, while Job Evaluation can be a long and tedious process it isn’t a sufficient end in itself.  You still have to price the jobs to create an effective salary structure.  The external survey data needs to be “interpreted” by a skilled analyst in order to ensure position matches are appropriate and the subsequent data properly integrated.  We call this “massaging the data.”

Some examples of how market data can be massaged between the survey source(s) and the salary structure:

• When you cluster diverse market data points into a graded salary structure.

• When you are not able to afford competitive rates you may lower the value of each position and create a below market salary structure.

• When you move jobs into certain grades to reflect the organizational realities of your company (the senior analyst must be either one or two grades higher than the core analyst).

• There will also be “favored sons,” positions that must be slotted a certain way in your hierarchy, regardless of market data.

If your goal is to price the internal and external value of your positions you do not need an involved job evaluation process, but you do need market pricing.   I would suggest a market pricing effort first, to establish competitive pay levels, and then if desired for other purposes follow up with some form of whole job evaluation process (keep it simple).  Finally, the evaluator(s) should recommend a degree of massaging to ensure that the final results “make sense,” both from an internal as well as external viewpoint.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Creative Commons image courtesy of IvanWalsh

More Discrimination is Needed

Not all discrimination is bad.  Being discriminating, having the ability to discern, is essential in life. If  you can’t tell the difference between day and night, you will have issues.  If you can’t distinguish between hot and cold, you can get burned or frozen.   If up and down are all the same to you, don’t go scuba diving or mountain climbing and avoid acrobatics at all costs.

Discriminating means being able to differentiate.  Negative connotations due to events in American history have shifted that original definition of “discriminate” from "to make or see a distinction" to the widely accepted meaning of “to treat unfavorably with prejudice.” 

Some discrimination is prohibited.  The United States has declared certain classes to be protected against discrimination and harassment based on:

• race
• color
• religion
• national origin
• age (40 and over)
• sex
• family status (re housing)
• disability
• veteran status
• genetic information
• sexual orientation (in some jurisdictions)
• gender identity (in some jurisdictions)

That is only a partial list, not even comprehensive for the U.S.; and other nations will have their own rules as well.

Every place prohibits certain forms of discrimination even as they encourage other forms of discrimination.  The very act of discrimination can be either bad or good, because some differences must be ignored while other distinctions should be noted.

Discrimination is needed to create pay equity.  Yes, pay equity is a semantically loaded term.  It not only involves comparable worth but also includes perceptions of fair treatment by all employees.

If you don’t distinguish between good performance and bad performance (i.e., “discriminate”), you will outrage your workers and upset your customers.  As fellow Café contributor Derek Irvine posted last month, employee perceptions about reward fairness are critical.  In effect, you must discriminate in order to be fair and to run an effective business.

Failure to differentiate between positive contributors and feckless shirkers will demotivate productive people who will conclude that management just doesn’t care about work output.  Regardless of what you SAY, human beings respond to what you DO.  When the company recognizes differences (“discriminates” in a proper manner) and offers appropriate consequences (both rewards and punishments) according to variable actual job results, desired behaviors are reinforced and undesirable behaviors are extinguished… at least, that’s the psychological theory which has proven valid in real life for ages.

That topic of internal equity in pay (only one of the remuneration elements relevant to “fairness”) was covered in detail by a panel whose forty-five minute discussion is available online in this embedded link. 

As we share thoughts on all these topics, remember not to jump to conclusions, because context is everything.

How does the elephant appear in your discriminating view?

E. James (Jim) Brennan  is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired 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.) and will express his opinion on almost anything. 

Three Things for Benefits and Compensation to Talk Over

The leaves are turning, the geese are flying south and right now your TPA is your best (or worst) friend. In other words, it's Open Enrollment season all over North America.

I've been working with my client on an Open Enrollment announcement email today. Even though rate increases are comparatively low this year and the company is adding some nifty new benefits, our planning discussions keep wandering back to the cuts the company made three years ago.

I think it's hard for a lot of us in Human Resources to find the compass these days. Many of us are still worried, for one thing. Maybe feeling guilty about the tough pitches we've had to throw to employees in the last few years. Or secretly uneasy that our programs aren't really addressing business needs -- whatever those are in this economy.

One thing is perfectly clear. Finances are much more complicated for all of us. And because of that, there are things that benefits and compensation could begin to talk over and maybe even collaborate on. I'm starting to think that employees would benefit from a closer relationship between the two functions.

Here are three things that come to mind right away that could benefit from closer teamwork. Add to this list if you have more suggestions!

1. Even if your benefit deal used to be better, it sure beats going it alone

Moderating cost increases stopped companies from redesigning healthcare coverage this year -- in combination with the lingering questions about Healthcare Reform. Even though it is easy to see a lot of cost cutting on the horizon when costs start zooming back up, consider the alternative.

As two sole proprietors, my husband and I pay $1,350 a month for spouse + 1 coverage -- a figure you're not likely to find on an Open Enrollment contributions chart. Barry and I need to make sure we have the income to cover these costs. At your place, how much does Compensation take benefit cost increases into account when planning the total compensation or merit budget? The topic comes up, but are the numbers run? Scenarios with typical demographics?

Just like the family financial planning you do at home, a detailed analysis (including typical out of pocket healthcare costs) might tell another story. The company may not change its practices, but it would be helpful to hear the stories that the numbers/scenarios tell.

2. We all know what employees want

Employees appreciate Total Rewards statements. The research tells us we can count on it. It gives employees a clear financial picture by adding the value of their compensation and benefits up for them. If we can bet that statements will earn us high scores on engagement surveys, why don't more of us do them? Or do them on a regular, reliable schedule?

And then make sure that managers know how to answer questions about the statements. Knowledgeable, talkative managers -- another communications priority that employees keep telling us about.

 3. Work can make you physically sick

We all know that job stress can damage our health. However, long hours and lack of sleep (factors that HR can't really influence) are not the primary culprits.

It turns out that the top two aspects of work with the most impact are issues that performance management is designed to help straighten out -- organizational constraints (aspects of the work environment that stop you from getting your work done) and role conflict (when one boss tells you to do one thing and another has a different idea). Role ambiguity is further down the list, but we all know how stressful that one can be, and how much HR can help straighten it out.

How do I know about these findings? Jeremy Dean on PsyBlog reported today on a recent study of the effect of occupational stress on physical symptoms like headaches, backaches, sleep disturbances and GI problems. There are five more ways that work can make you physically sick with these symptoms, if you want to check out the article. It's an eye opener. 

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.