Is There a New (Reward) Deal?

If a new reward deal is put in place and nobody hears anything about it, does it exist?

I had the chance this week to spend some time perusing the What's Working Around the World report issued by Mercer, which highlights the work views and attitudes of nearly 30,000 employees in 17 markets around the globe.  The report focuses on the erosion of employee engagement and the shift in the employee value proposition (aka the "deal") that has occurred in response to the economic turmoil of the last few years.

As the report summary notes:

Without question, employees liked the "old deal" of more generous benefits and pensions, steady pay increases and lifetime job security.  They have - reluctantly - accepted that it is not coming back and are even willing to take tradeoffs, such as more training instead of job security (to keep them employable in case they are laid off) and pay for performance (in lieu of tenure-based annual pay increases) to reward their good performance.

But the perception that came through clearly in our survey results is that employees believe employers are not living up to their revised promises and are not delivering on this "new deal".

Not surprisingly, much of the angst - for employer and employee alike - centers around base pay opportunities, the most expensive and inflexible (for employers) and the most highly valued (for employees) element of the employment deal.  Mercer's results for North America, for example, suggest that not only has satisfaction with base pay dropped, but fewer employees report that they understand how their pay is determined. So the stakes around making changes here are pretty high.

While many employers are still working to get their arms around the specifics of their own particular "new deal", many others have already taken solid steps with thoughtful and specific changes to the configuration of their total reward programs. 

The question is: do employees understand them?

My experience on-the-ground and the conversations I've had with colleagues suggest that many of our bold redesign efforts have been followed with timid, even reluctant, communication efforts.  To some extent, this is understandable.  We are aware that much of the "new" rationale and details will likely not be greeted with a standing ovation from employees.  And so there is the undeniable temptation to get it over with quickly and efficiently - like ripping off a bandage - and move on.

The result is that employees don't really see - and their managers are unprepared to elaborate on - the whole story, the full underlying rationale, the manner in which business requirements and employee needs have been considered and balanced in the purported "new deal".  And when they are forced to fill in the information gaps themselves, with their own conclusions and the say-so of their cohorts, the resulting picture can be a mighty unflattering one.

The "new deal" often forces employees to accept a more adult partnership with their employers, taking on a great share of the responsibilities and risks of the relationship.  We will never pull this off, nor convince employees that we are honoring our end of the arrangement, unless we raise the stakes on communication and information sharing.

That's my take.  Yours?

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Image courtesy of redtreetimes.com

Comments

[Ed Ura]

Spot on, Ann. As a consultant myself, it is often frustrating when you work with a client on a new program that is not only more effective, but gives employees more opportunity to control their destinies, only to see that the message never gets through. I fear that too often, organizations really don't understand that "communications" isn't just a memo, or twenty minutes at a monthly employee meeting. I worked with a client last year that really did "get it." We had eight two-hour sessions over two days, to give all 150+ employees an opportunity for a more personalized presentation, and get their questions answered. As you'd expect, not everyone liked it, but everyone understood it.

[Margaret O'Hanlon]

Recently, communicators have been urging HR to speak with courage. Ann, it's clear that that's what you are urging as well.

I see so many companies thinking, in our current economy, that they only need to mention things to their employees, because after all employees are worrying about job security and their family income. They are devoted to keeping their job. Where's the ROI, HR asks?

Well, we taught them to ask the ROI question, but we never dwelled much on the answer. For over 10 years, Towers Watson has published solid research that indicates that companies that talk about their new deal have a higher Return to Shareholders. There's other research out there, as well.

Of course, companies that are highly effective at communication talk about a lot of other things besides the new deal. But in this economy, the new deal is what employees want to talk about. They are tightly focused on what they can do to keep their company successful. Why not have the courage to talk out loud and often with them about it?

[Ann Bares]

Ed:

Sounds like you and I have had some parallel client experiences - it is frustrating to see a new plan, particularly one with exciting possibilities, miss the mark because of lousy communication efforts.

Margaret:

Great points all from our "go to" expert on communication. You're right, and its not a small thing, that companies who communicate well on rewards tend to communicate well in other important arenas. The courage to communicate clearly generates returns in a lot of areas.

Thanks for the comments!