Editor's note: I am proud to feature as today's Classic the cautionary post written for us a few years ago by Jay R. Schuster and Patricia K. Zingheim, the winners of the prestigious WorldatWork Keystone Award and authors of some of the top selling books in our field. Unfortunately, the problems highlighted by Pat and Jay are not only still with us today but are becoming more entrenched as too many leaders are content to focus exclusively on market competitiveness and not rocking the board. As Jay told me during our discussion about republishing this post, the warning light is still flashing!
Total rewards professionals are the best placed in Human Resources to add value to an organization. Our profession is situated to influence the development of strategies and tactics that align base pay, incentives, benefits and other total reward elements to link the workforce with organizational goals and priorities. In 2000 we posed a total rewards model with the achievement of business goals central to how organizations might plan their total rewards’ strategic thinking (Pay People Right, 2000). This model (Exhibit 1 below) has been adopted by many organizations interested in aligning rewards with business objectives and remains the only total rewards model with goal achievement at its center. Our recent study of large, challenged financial institutions (“Compensation and Human Resource Practices During Crisis: Which Solutions Add Value?”, WorldatWork Journal, Q1 2012) focuses on some troubling realities about how far the total rewards profession has wandered from a realization that a workforce can be secure and viable only if it adds value to organizational goals and if total rewards are closely linked to attaining organizational goals. CEOs and other senior executives we interviewed suggested that of all the functions, Human Resources and Total Rewards were least aligned with what the organization needed to do to respond to the financial crisis that impacted all of us. CEOs reported, “Everything works during good times, but Human Resources and Total Rewards were completely unprepared to help us meet business challenges during tough times.” And a read of this article will show that these words are just at the surface of the indictment of our profession.
While the credible research focused on total rewards is somewhat sparse, there is enough to have total rewards professionals ask more questions before leaping into adopting reward programs, that while easy to implement and enjoyed by people who favor gifts from their employer, have no support as it relates to providing real value when people need to help the organization prosper. Case in point is the subculture of work-life benefits that has emerged in our profession. These programs require no heavy-lifting on the part of those who propose them and research suggests they are most likely to create a workforce linked to their organization by entitlement rather than a win-win partnership based on being rewarded for adding true value to the organization. While there are many examples of organizations that engaged their workforce to help meet organizational and business goals by implementing variable pay, performance-based compensation, performance management, and pay based on the acquisition and application of skill and competency, there are no examples wherein troubled organizations were able to enlist the aid of their workforce by virtue of work-life benefits, pet insurance, yoga classes, and gift certificates to provide organizations the opportunity to help their ROI.
The total rewards profession is very important to the future of a serious HR field finally earning the “seat at the strategy table” that we constantly read about and hope for. The first step in this direction will be to focus on a total rewards model that truly adds value to the business and avoids the marketing adventures that suggest that the subculture of work-life benefits is the secret sauce for our profession.
Jay R. Schuster, Ph.D. and Patricia K. Zingheim, Ph.D., are partners in Schuster-Zingheim and Associates, Inc., a compensation and total rewards consulting firm founded in 1985. They are authors of three books and numerous articles and are recipients of the Keystone Award, WorldatWork’s highest honor in the compensation, benefits and total rewards profession for their contributions to the body of knowledge. Their website is www.PayPeopleRight.com.
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