Compensation Systems

Paying the Price

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microicon/Shutterstock

When is the last time you had to ask for a pay increase? For many Canadian workers, approaching their employer to ask for more money is not high on the list of job-related things they enjoy doing. While there are many valid reasons that an employee might have for requesting a pay increase, there is no guarantee that the response from the employer will be one that meets the needs of that request.

A recent study by the American-based PayScale compensation software firm, offers an uncomfortable set of findings based on a wide-reading survey exploring issues around pay raise requests.

Click here to access the summary of PayScale’s survey.

The results of this survey are analyzed in a corresponding article posted recently by Harvard Business Review.

Click here to read the article.

From a compensation management perspective, some key messages emerge about the connections between constructive/pro-active compensation strategies versus negative/negligent compensation approaches and their direct links to employee retention. Unsurprisingly, the survey provides statistical evidence showing that when an employee is denied a wage increase, there is a high probability that the employee will be on the path to exit from that employer.

While the survey and the results are based on American companies, they show an alarming connection between race, gender, and the denial of pay increases—this contrasts with much lower rates of pay-increase denial for white males. As Canadians and as pro-active Human Resources practitioners, we must take these statistical results seriously and consider them in relation to our own workplaces to ensure that our compensation practices, especially as they relate to race and gender, do not follow the same statistical paths.

Good compensation planning must be neutral, pro-active, and fair so that Canadian workers can focus on the things they do enjoy doing.

 

Discussion Questions:

  1. Based on your own experience as an employee, what would you do if your request for a pay increase was rejected by your employer?
  2. From the perspective of an HR professional, develop a script for supervisors/managers to use when telling employees why they will not be receiving the wage increase they have asked for.
  3. Identify three positive and three negative aspects of a differentiated compensation system (wage increases granted or denied based on individual requests).
  4. Identify and explain three key compensation methodologies that can be used to ensure an objective, fair, and pro-active approach to individual wage requests.

Have We Got a Job For You!

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For many people involved in the study of compensation strategies, their goal is to work in the compensation field — as soon as possible. Coincidentally, the federal government is looking for qualified compensation advisors to begin working — as soon as possible.

What’s the catch? The work itself requires some heavy-duty clearing up of the systems mess resulting from the implementation of the Phoenix pay system for federal employees.

As reported through Canadian news outlets, the federal government is continuing in its efforts to try to fix the numerous issues that continue to plague its pay systems. There is, apparently, a fundamental problem that has resulted in hundreds of federal employees receiving incorrect pay, or no pay at all.  These issues have been in the news since the winter of 2016 and are still not resolved.

Click here to read the most recent update. 

An important element of learning is the process of figuring out how not to make the same mistake over and over again. Though I don’t have the benefit of all of the facts linked to the system problems, it seems evident that there is a significant failure of learning in this case. The mistakes continue to be made.

What we can learn from this is how critical it is that the right strategies be implemented with the right people in the right way in order for any compensation change — be it structural or procedural — to be successful. It does not matter if the amount of compensation offered to federal employees is generous, or even fair. If these employees do not get paid what they were offered and what they accepted as part of their contract of employment, the amount of compensation considerations mean nothing.

Hopefully, the compensation advisor positions will be filled as quickly as possible by qualified and dedicated professionals (like you), who are ready to get the job done.

Discussion Questions:

  1. Would you accept a position as a compensation advisor with the federal government as described in the news article? Explain your rationale.
  2. If you were the Human Resources practitioner with responsibility for employee communications in a department impacted by these pay problems, what would you say to those employees?
  3. If you were an employee of the federal government, what types of expectations would you have with regard to your compensation, both retro-active (if mistakes were made) and on a go-forward basis?

 

Vacations Earned in Trust

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Brian A Jackson/Shutterstock

The title for this post reflects the typical language that is used when describing how vacation is accrued or allocated in an employment contract or a collective agreement. While meant to reflect an administrative approach to the calculation and disbursement of earned vacation time, the word ‘trust’ holds some powerful meaning in the employment relationship.

As part of an overall compensation strategy, do employers actually trust their employees when providing them with vacation time? Is it a reward well earned?

We have all heard of, or may have had personal experience with, the workplace where vacations are calculated according to strict provisions; given begrudgingly; and scheduled to fit the business needs of the organization, first and foremost.

What might happen if these approaches were thrown out the window leaving vacation earnings and usages entirely up to the employee? Could we trust our employees to manage their own time to take a break when they need it the most?

According to the CEO of Vigilant Management in the United States, yes we can!

Click here to read the article.

Clearly, the most important element of the unlimited vacation policy arrangement is a high degree of trust between all parties in this particular work place. In a Canadian context, as noted in the article, each province provides for a legislated minimum of vacation earnings which differs from the approach in the Unites States. Even with these legislated minimums, if there was no maximum time capping the amount of vacation an employee could take, how many days would actually be used?

Most of us are creatures of habit and do not like too much of good thing. This could apply equally when thinking about both going to work or taking vacation. When employees are able to see, feel and believe that they are trusted, then work and vacation both become complementary parts of one good thing, instead of too much of one being bad for the other.

Discussion Questions:

  1. At what point in your vacation time do you become bored and want to go back to work?
  2. If you had unlimited vacation time from your current workplace, how much time would you want to take as vacation? How would you schedule your time?
  3. From a compensation perspective, how could you calculate the costs of unlimited vacation for employees?