Work to Earn?

Profit-seeking concept with businessman runs for a bag of money hanging on a fishing tackle
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“What would you do if your income were taken care of?”

This is the question that many European countries are asking of its citizens. Finland has answered this question by providing a basic guaranteed income to its unemployed workforce as a strategic initiative during challenging and changing economic times.

 

Click here to view the video about the guaranteed income plan in Finland. 

As noted in this video clip, the guaranteed income scheme is an experiment based on the compensation concepts of motivation and rewards. In this case, the reward provided by a guaranteed income for two years should act as a motivator to those who are unemployed. It allows them to take on a low-paying job without having to file reports or pay back the government income.

It seems that this incentive plan is based on the positive pull of income as reward. If a basic income is guaranteed, will a person want to increase the level of their potential rewards by taking on low-paying work without risk of losing the guaranteed pay? Does a guaranteed reward lead to motivation for more rewards?

On the other hand, as mentioned in the clip, if the person wants to stay on the couch and do nothing for two years, they have that choice as well. Will the guaranteed income represent a reward for doing nothing?

The hope, or theory, is that the pull of positive potential should outweigh the drag of negative inertia.

If Canadians were able to build a similar strategy built on possibilities and belief in human potential, how far could it go?

In a Canadian context, if such a plan could be offered to our own unemployed workforce, perhaps it would allow for young workers to take on unpaid internships; for workers displaced by automation to try something new that builds on unused skills; for older workers who have been laid off, to become productive again instead of discarded and left out.

No matter what the outcome will be over the next two years in Finland, this innovative experiment exploring the basic links between the value of work and the value of rewards will likely have impact around the world.

Discussion Questions:

  1. If you had a basic guaranteed income for the next two years, what choices would you make to improve your current situation?
  2. In a Canadian context, how could employers benefit from a basic guaranteed income strategy?
  3. What are the risks associated with this experiment?

Millennial Considerations

Two creative millenial small business owners working on social media strategy using a digital tablet while sitting at desk
AYAphoto/Shutterstock

The times they are a-changing, for sure.

Much has been written about the challenges facing the millennial generation as its members begin to take greater hold of the economy and the workforce. The millennial worker is someone who has grown up with access to a world of information through digital resources that a person from previous generations simply did not have. As this millennial generation increasingly populates the world of workers and business leaders, they are bringing about a changing view of what constitutes effective rewards and incentives for employment performance.

A recent article, published by Benefits Canada, outlines some positive statistical analysis of the millennial approach to indirect reward plans.

Click here to read the article. 

Previous generations of managers commonly held back group health and dental benefits until employees asked for them. It is apparent that upcoming business leaders recognize the reward potential of offering wellness initiatives from the very beginning of the employment relationship. In order to have a healthy, engaged and constructive workforce, millennials prefer to have a pro-active influence in an employee’s social and physical well-being.

Further, supporting employees on a pro-active wellness path is more affordable at the beginning of a business venture, rather than incurring escalating premiums for an unhealthy workforce later on. It is evident that access to digital resources, such as the statistical evidence provided in this article, has had a great impact on the way benefits are provided. It is also evident that the Human Resources professional has helped to shape this changing workforce view in a positive way. And, as noted in the article, millennial business owners appreciate the value of the Human Resources professional in helping to advise, shape and shift the modern workplace in a constructive way.

Discussion Questions:

  1. What are the top five HR compensation ‘must-haves’ you would advise a small business owner to put into place from the start?
  2. Why do you think flexible benefit plans, as outlined in this article, are attractive to the millennial workforce?
  3. After a year of working in your chosen profession, if you had a choice between a moderate pay increase or full access to an employer paid benefits plan – which would you select? Why?

Perils of Pay Equity

a young caucasian man in jeans taking two coins of one euro out of his pocketThe Pay Equity Act in Ontario has been in place since the 1980s. As we know from our studies, this legislation requires employers in Ontario to ensure that compensation levels for the value of work between traditionally designated ‘male’ and ‘female’ jobs are paid equally.

The pay equity process itself is extensive and exhaustive. It is also expensive, if compensation adjustments need to be implemented based on the results of the process. As this is a legislated issue for public sector employers in Ontario, it makes sense that public sector organizations will comply with this mandatory requirement.

Apparently not.

Recently, OPSEU (the union representing employees working with Community Living in Tillsonburg) issued an open letter as a result of the inability of Community Living to make the mandatory pay equity adjustments for its employees.

Click here to read the letter.

Why would any employer choose not to pay, when it is required to do so by law? As with most compensation dilemmas, the issue of affordability comes into play. A news article linked to this story provides an important insight into this seemingly simple pay issue.

Click here to read the article.

Public sector organizations receive their funding from the government. There are very strict parameters in place as to when and how the funding can be used, especially as it is linked to compensation. Given that the government will not fund pay equity adjustments, how can organizations like Community Living pay for mandatory wage adjustments if they do not have the money? It seems to be a Kafkaesque dilemma, as the government requiring the wage adjustments is the same source for funding that will not support the payment of these mandatory adjustments.

In the end, the employer is left holding the bag containing an unfunded liability and an unhappy workforce, which makes a heavy burden for the Compensation Manager to carry.

Discussion Questions:

  1. If you were the Compensation Manager for a public sector organization required to make Pay Equity Payments, what steps would you include to design an affordable compensation plan?
  2. Who should be responsible for ensuring funding for pay equity costs in the public sector? Explain your rationale.

Compensation Cuts in Alberta

Word Reward against the red falling graph. 3D illustration picture
Imagentle/Shutterstock

In late February, the Alberta government announced the implementation of significant compensation cuts for individuals holding senior executive positions in public sector agencies, boards, and commissions.

On the face of it, these cuts are significant.

Click here to read the Globe & Mail’s assessment of this change.

Click here to read the CBC’s reporting on this change.

The compensation decreases come as a result of a long term review of compensation levels for these positions which are paid for by the taxpayer. There is no doubt that the individuals holding executive-level positions are just as dedicated to their work as any other Canadian committed to a life of public service. On the other hand, is the value of the work performed at the executive level limitless? Do the performance requirements match the rewards that include housing allowances, golf course memberships and hundreds of thousands of dollars in salaries?

In isolation, the answer to these questions would be that the levels are excessive. Of course, the Albert government’s actions to implement these drastic cuts appear reasonable for these types of positions where the compensation levels seem to be excessively rewarding.

However, nothing linked to compensation exists in isolation.

Alberta has gone through an extreme economic change that has impacted all levels of industries and services across the province. When the economic times were good in Alberta, they were exceptionally good for everyone. All compensation levels were high. It would make sense that any executive-level position was paid equitably in comparison between the public and private sector markets. As the Alberta economy has dropped, so too have the opportunities and compensation levels for everyone. In order to compete in the market place, everything must adjust to current economic realities.

Rather than seeing this compensation adjustment as a reduction of individual proportions, we have to consider the context that is part of a larger economic cycle which ebbs and flows based on what the market, and the taxpayer, will bear.

Discussion Questions:

  1. What is the difference between public service and civil service?
  2. What are the risks associated with capping severance pay for other senior executive positions across Canada as a result of this change in Alberta?
  3. From a Human Resources perspective, what are the challenges that these public sector organizations will face into the future?
  4. If you were one of the executives facing a $500,000 salary cut that reduced your earnings from $900,000 to $400,000 per year, how would you react?