Universal Basic Income = Basic Rewards Strategy

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A fundamental premise of any compensation strategy is that the system of rewards has (as noted in our text) “a powerful effect on behaviour.” This effect can be positive if the rewards system is built within the framework of organizational justice. If individuals perceive that rewards provide for fair outcomes resulting from fair processes, they will believe and behave in a way that supports the rewards strategy. This forms part of the psychological contract with the organization.

On the other hand, if individuals do not believe that the rewards system is equitable or fair, their behaviour follows a negative path of dissatisfaction, disengagement, and, ultimately, total disconnection from the organization. This disconnection is either voluntary, in the form of a quit, or involuntary, as the organization has to make the ‘quit’ decision for the individual. The result is that both the physical employment contract, as well as the psychological contract, with the organization are severed completely.

When we expand the concept of the organization to the broader social community, we can see the direct and powerful impact of rewards system(s) provided by government relief programs through the continuing pandemic crisis. Millions of Canadians are out of work, and they face devastating consequences if they cannot afford to pay for basic provisions, such as food and shelter. Financial income programs, such as the Canadian Emergency Response Benefit (CERB), are able to provide some relief to many unemployed Canadians, which allows them to meet, to some degree, their basic needs. This emergency rewards system is not perfect, but it does alleviate some financial pressures. Furthermore, the distribution of the CERB funds appears to be based on a perceived system of organizational justice where the process and the rewards are equitable, meaning that the same rules apply to everyone and the distributed funds are the same.

Does the CERB funding provide for an increase in the psychological contract within our social communities? According to Maslow’s hierarchy of needs, when survival and basic needs are met, individuals are able to move toward social needs. This need is one of social belonging, which, from a compensation strategy application, speaks to membership behaviour and commitment. Once individuals have a sense of belonging, they can progress along Maslow’s theoretical hierarchy to meet esteem and self-actualization needs. When people are able to function beyond meeting their basic needs, they are able to be engaged and committed to the larger community.

With this in mind, the question of continuing funding, such as that provided by the CERB, as a universal basic income strategy for all Canadians, comes into play. It may be time to continue the path to a universal basic income strategy, as companies and economies start the very slow path to recovery from the pandemic. The positive aspects on a global perspective of a basic income strategy are explored in this article posted by the CBC. The article presents an interesting perspective that a basic income strategy provides for more motivation for individuals to work, which seems to link directly to the positive aspects of a psychological social contract. John Michael McGrath provides us with this opinion piece, in which he explores the impact of ongoing economic change, including the need for a basic income strategy, as we move into a post-pandemic world of work.

As noted in both articles, and based on our own pandemic experiences, we know there is no going backward once this crisis is over. The movement forward, however, provides such great opportunities for social change and economic justice. Let’s make it work for everyone.

Discussion Questions:

  1. In your opinion, how does the concept of a universal basic income align with the principles of procedural and distributive justice?
  2. How would a universal basic income provide a remedy for the four causes of reward dissatisfaction?
  3. In your opinion, would a universal basic income increase or decrease the personal motivation of individuals to find paid employment?

The Changing Times for Sick Time


In the multitude of challenges facing employers in the midst of the COVID-19 pandemic comes the recognition that there is no ‘normal’ anymore. Existing business practices, such as the demand for a medical note from a doctor to justify an employee’s illness, are just not sustainable. When the public health authorities require that citizens stay at home and self-isolate if they have any symptoms of illness, the formality of requesting a doctor’s note seems ridiculous. As Human Resources professionals, we need to support and implement the changes for improved compensation practices.

Letting go of the old ways does not come quickly enough for some employers. The Tim Hortons fast-food chain made the news again for their unfortunate choices in compensation practices related to sick leave. As noted in this article, employees of the franchise continued to be required to provide a medical note to justify taking an unpaid sick leave day. After taking five days of unpaid sick leave, the employee would be fired. Needless to say, there was significant negative backlash when this practice hit the news and social media outlets.

It seems that the negative reaction pushed this particular employer into changing their sick leave and compensation practices. Five days after the first news article, the Tim Hortons franchise also announced a commitment of $40 million “to support employees” who are affected by COVID-19. As noted in this article, the company will pay employees who have the virus or are quarantined “up to 14 days.” The clear message from this updated policy was one of public safety, support, and recognition of the need for change in these unprecedented times.

Unfortunately, the journey on this new road did not last very long until once again, one of the franchise stores in Alberta hit the negative news cycle with this post. Fortunately, the note from the franchise owner was removed. The commitment to Tim Hortons’s new policy, including the removal of the requirement for sick notes, was re-posted in the public domain.

Change is hard. Forced change is even harder. These examples show how important it is to leave the old road behind us. Once this crisis is over, we must make the choice to stay on the new road as it leads to a safer, more sustainable future for us all.

Discussion Questions:

  1. In your opinion, how can a fast-food franchise implement improved compensation practices related to attendance management?
  2. Do you think the practice of termination after five unpaid sick days is fair? Explain your rationale.
  3. What types of HR-related supports should be in place for any fast-food franchise owner?

The Costs of Attracting Generation Z

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During times of great chaos, most organizations do what they must to make it through the storm; however, once the chaos of the immediate disruption is over, organizations should not forget the value of strategy.

The role of HR in the development and implementation of an organization’s strategy is to continually assess if the HR strategy aligns with the overall business strategy. This blog post will discuss the importance of compensation strategies on the recruitment and retention of Generation Z employees.

Obviously, the COVID-19 pandemic has made all employers and employees anxious about their personal and professional lives, but even before the spread of COVID-19, Generation Z employees stated that their biggest barrier to professional achievement was anxiety!

According to research from the Workforce Institute, posted in an HRD article, 34% of the Generation Z survey participants felt anxiety was their top barrier to workplace performance, with women reporting a higher level than men—39% to 29%, respectively. When the responses were examined by country, the statistic rose to 44% in Canada—higher than the U.S., which reported 40%.

These are revealing statistics that show a significant number of Generation Z workers have anxiety, and it is holding them back in their performance in the workplace. Additionally, the article references the American Psychological Association 2018 report, titled “Stress in America: Generation Z,” which found that “77% of Gen Z adults in the U.S. were stressed about work versus 64% of adults overall.”

So, what does workplace anxiety have to do with strategic compensation? If you refresh yourself on Maslow’s hierarchy of needs pyramid, you will recall that the first and second level are physiological needs and safety needs, respectively. Organizations know that one of the best ways to reduce anxiety in the workplace is to ensure employees’ basic needs are being met.

All employees, including Generation Z employees, need the security of a full-time job and benefits to flourish in the workplace. Organizations should consider the needs of Generation Z when designing their strategic compensation programs.

Discussion Questions:

1. Click to see a research article from the Workforce Institute. Read through the article, and prepare a list of what Generation Z would like to see in the workplace from the perspective of compensation and benefits.

2. Based on the list from question 1, create a summary presentation to convince your CFO that these principles should be integrated into the organization’s strategic compensation plan. You can add supporting research to your work as well.

Pension Plan Dilemmas


Mention the words “pension planning” to most people and the typical response is one of underwhelmed excitement. Before your own eyes glaze over at the thought of reading the rest of this blog post, imagine yourself in the future, having completed a successful career and entering into retirement. Do you see yourself as financially secure or are you in financial peril?

One hopes that the vision you have for yourself is that of financial security. The means to achieve that security are dependent on the fiscal planning decisions you make now, or that are made for you by your employer through the enrolment of employees in a pension plan.

As we know from our compensation studies, defined pension plans come in two categories.

The first is the defined benefit plan. This program provides for “retirement income based on a proportion of the employee’s pay” upon retirement. This means that an employee would receive a set amount of income, once they retire, based on a calculation of earnings that the employer has invested on their behalf. The employer is responsible for managing the investment.

The second is the defined contribution plan. This approach provides for “retirement income based on the accrued value of employer and employee contributions to the plan.” This means that both the employee and the employer pay into the plan on a set percentage. The employee can decide how the funds are invested. The income upon retirement is subject to strict regulations, and the amount the employee receives is dependent on the overall value of the fund.

Which one is better? There are conflicting evaluations for both types of plans.

A critique of the defined benefit pension plan is provided here. As noted by the author, defined benefit plans seem to be increasing in risk, based on numerous and evolving factors. This type of plan appears to be on the decline as an effective tool for ensuring financial security in retirement.

The risks that come from defined contribution plans are explored here. This author identifies the risks that may be in place should the employee not know how to invest or access the funds accrued on their behalf once they do retire. Defined contribution plans continue to be implemented as a preferred option for both employers and employees though, compared to the defined benefit plan option.

In either case, it is important that employees know what their options are well before the thought of retirement becomes a reality and, with it, the need for realizing a financially sound future.

Discussion Questions:

  1. In your opinion, should Canadian companies continue to offer defined pension plans for retirement security to employees? Explain your rationale.
  2. If you had to choose between a defined contribution plan and a defined benefit plan for yourself, which one would you choose? Explain your rationale.
  3. What other types of retirement planning alternatives could an employer provide instead of defined benefit plans?

Wage Forecast Going UP!


All HR professionals have to strategically plan the potential and actual costs of wages every year. There are many factors that affect the business cycle of wages, such as the economy, the Consumer Price Index (CPI), and the unemployment rate:

If one considers these factors, what does the upcoming 2020 forecast look like for employee wages? Here are some perspectives based on these economic indicators.

The North American economy has been booming for over 10 years. There is always global uncertainly with circumstances that are difficult to predict, such as trade wars, changing politics, and possible pandemics, but most economists say the business fundamentals in Canada are sound. Inflation, although stable, has been trending upward in recent years, and one of the most important economic factors to consider—unemployment rate—has been down in North America. The US unemployment rate was at 3.5% in 2019, which was the lowest it had been in 50 years. In Canada, the unemployment rate was the lowest it had been in 43 years in 2019 at 5.8%.

The low unemployment numbers will be the biggest contributor to wage increases in 2020. A recent wage survey predicts the average wage increase for Canadian employees will be approximately 2.7%, which is just above the current rate of inflation, which means employees’ actual wages will also increase.

All of these factors are going to put great pressure on HR departments. As wage demands increase, it will be more difficult to recruit and retain employees as job openings will outpace the supply of employees.

2020 will be an interesting year for HR departments, which will have to be at their sharpest to maintain their compensation budgets, and still be able to hire employees without too much upward wage pressure.

Discussion Questions:

Review the interactive wage survey from Normadin-Beaudry, and find your provincial data. Identify your province’s predicted wage increase for 2020 and compare it to the average wage increase in Canada. Once you have identified the wage increase, research and identify your province’s CPI and unemployment rates. Using all the data collected, create a 5-minute presentation for your VP of HR on developing a new compensation strategy for your organization.