Two Types of Compensation People

Compensation people seem to come in two types: employee judges and employee advocates. Bear with me while I oversimplify about how each type distributes rewards. Follow my thoughts for a minute; then let's discuss these sweeping generalizations about this profession being divided into dispassionate adjudicators and egalitarian advocates -- more or less.

I see major dramatic (if not polar) differences in attitudes among our peers about distributing rewards. One group adamantly maintains that pay for performance is a Good Thing and rewards should be allocated to the most deserving ... whoever they are. Such "judges" believe in measuring contributions and rewarding consequences proportional to output results. Another group (which I will carelessly label "advocates") prefers to ignore individual performance distinctions and instead would confer identical generous compensation rights to all employees.

"Judges" expect employees to earn income by demonstrated performance.  "Advocates" consider all compensation an employee entitlement tied to membership in the group. While most reward "judges" agonize over applying variable pay allocation methods to individual workers, many "advocates" disregard differential remuneration approaches and want to distribute as much as they can as non-controversially as possible to virtually everyone. One group worries about what senior management will think of their decisions and the other group worries about whether it has pleased the general employee population. Judges focus on allocating what is earned and deserved according to current results; advocates focus on rights that, once granted, imply guaranteed perpetual rewards.

In our much-criticized subset of the HR community, for every penny-pinching tightwad "judge," there seems to be an egalitarian "advocate" benefactor dedicated to playing Santa Claus. The more extreme examples on either side seem to vary according to whose money is being disbursed.

Certain circumstance favor the respective attitudes of conservative allocators or generous givers.  When the cost comes out of their own pocket, managers tend to be quite parsimonious. Bonus pools that shrink when expense outflows exceed a nominal level frequently inspire fervent compliance with budget limits. If awarding workers an extra tenth of a percent increase will eliminate your year-end bonus, it becomes quite difficult to muster enthusiasm for that additional expense. One might even suspect that it would require tremendously powerful evidence and severe psychological pressure to motivate the typical manager to voluntarily accept a cut in their personal anticipated income in order to boost the wages of workers otherwise content with their pay.  Compensation managers at prosperous corporations and tax-rich government agencies, on the other hand, are more likely to be advocates haunting discussion boards seeking new ways to further enrich already well paid workers. Shop stewards and executive compensation consultants are another two occupational categories that extend the entitlement philosophy to the farthest degree possible. 

The typical total reward manager is generally caught in the middle between management and other employees, pulled by both sides.  We don't want to be either heartlessly dispassionate misers or overly empathetic softies.  Part of the problem here is the essential confusion about who we really work for.  Are we the minions of top management or the protectors of our constituent workforce?  Or both?  We HR/compensation professionals face a constant dilemma, because what is best for one party may not always be in the best interest of the other. 

Do compensation professionals truly display a basic preference between judging and advocating?  Must we always be forced to decide between responsibly managing organizational assets (like cash and human resources) or generously supplying the maximum enrichment to the lives and careers of the employee population we serve?  Unsure if there can be a balance between the two objectives or if we can achieve both simultaneously.  Please share your thoughts.

Or am I seeing things that aren't there, again?

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience. After corporate HR and consulting roles in most industries, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

U.S. Army Garrison Red Cloud 2014 Thanksgiving Meal image, courtesy of Creative Commons

Comments

[jay]

Where do the 'compensation cowards' come in, Jim? Those who say 'yes' to everything no matter how silly if it comes from the lips of someone in a senior management role? I am certain that nobody who views this blog fall in that category but perhaps we can 'turn over a rock or two'?????

[E. James (Jim) Brennan]

Oh, they definitely fall within the realm of advocates, givers and enablers, Jay. On second thought, if they only defer to senior management, they don't meet some of my original "objective judge" criteria. Perhaps such obsequious suck-ups are rubber-stamping management enablers without an independent thought who masquerade as impartial judges? They certainly don't seem to consider much beyond personal self-interest and simple survival.

[Jay]

Good post, Jim.

[Chris Dobyns]

I've been reading these posting/articles long enough now, that I can almost predict who the author is - long before I get to the bottom of the page. And whenever I see the word "parsimonious" used anywhere in an article, that's always a good "tell" for who the author is . . . (BTW, I guessed correctly on this one)

I'll concede that I've run into very few of the advocates in my career. Most professional contacts I've crossed paths with were more in the middle ground category - although it was always clear that if you gave them a slight nudge (and handed them a gavel and a black robe), they were judges at their core.

Guess I've never been confused about who I worked for in my career - and whose interests I was responsible for upholding - from a pay and compensation perspective.

It was the organization's.

On reflection, I'm not sure this split-camp phenomenon is the exclusive purview of just totals rewards or HR people - as I've seen plenty of managers with my current employer, who regularly seem confused about whose interests are paramount. But that's a different set of circumstances - and probably a fun, free-wheeling discussion for a different day.

Maybe a better question is the "why" of the existence of these two philosophically opposite extremes. While both are not without some basis, it strikes me that they're both trying to maximize the positive effects from an intervention - but minimize the negative outcomes. Sounds like we're seeking an empirically-balanced, behavioral solution . . . and a solution - that with time, I think is coming.

[E. James (Jim) Brennan]

Well, Chris, after using up "miserly" and "penny-pinching", I decided to apply a fancier term than "cheap" or "tight-fisted" to describe management payroll conservators. What other word would you choose?

More important is your "why" question. Suspect that answer will also answer my final questions. Let's hear more thoughts ...

[Jules]

How about the mix of advocate and judges. I advocate when relevant but at the same time, I have seen environments in which performance driven plan can work. It has to have $$ to back it though. 2-3% is not going to drive performance far.

[E. James (Jim) Brennan]

Agree that mixes are better, Jules. Cheerleaders should choose good sensible causes. Rational thinkers should promote ideas that enhance workers' lives. There is no actual barrier that prevents a judge from being an advocate or an advocate from being a judge. I like to think I am bi-polar (or ambivalent) that way, able to draw from each tendency.

While most HR/comp types combine a lot of both, most appear to have a dominant preference. Some seem stuck at one extreme only, and that can be scary. Generalizing terribly, of course...