Compensation

Universal Basic Income = Basic Rewards Strategy

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Rob Wilson/Shutterstock

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?

How Do You Show Your Employees You Care?

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Be Panya/Shutterstock

How do you show your employees you care? You care for your employees’ children.

All employers are looking to use perks and other benefits to create sustainable bonds and lasting connections with their employees. Throwing more money at employees may seem like an easy way to improve employee workplace satisfaction but it is not they only retention tool out there. Employees stay with a company because they believe the company cares about them and their well-being.

If they really want to show employees they care, perhaps more HR departments should follow Starbucks’ lead and provide child care—not full-time child care, but a service many would consider almost as valuable—back up child care when an employee needs it the most.

Starbucks in the United States has partnered up with a company called Care@Work. Each eligible Starbucks employee will receive a free premium membership to access Care@Work services including subsidized day care at a cost of $1 per hour for up to 10 backup care days.

This isn’t only for child care, however. Starbucks realizes that many of their employees are in the sandwich generation and are looking after children as well as dependent adults. This benefit perk applies to both dependent groups.

Click here to read about Care@Work’s services.

With the tight labour market in North America, employers are looking for ways to stand out and attract prospective employees, while retaining existing ones. Providing subsidized child and adult care may be a key factor in helping your organization stand out.

Click here to read more about Starbucks’ innovative benefits.

Starbucks has been a leader in the service industry, which traditionally treats its employees as low-skill, entry level, transient workers. Starbucks has done the opposite by providing its employees with the full spectrum of benefits including medical, education, stock options, and even pensions.

Cynics might argue that Starbucks is adding all these benefits just to retain employees; however, it’s worth noting that the Starbucks mission statement highlights a desire to “inspire and nurture the human spirit”, and that among the company’s core values are commitments to foster a sense of belonging, to find new ways to take the company forward, and to “challenge the status quo”. Others might argue that in providing backup care for its employees’ loved ones, Starbucks is doing an admirable job of living up to this mission statement and these core values—that it is doing business “through the lens of humanity”.

Click here to read Starbucks’ mission and values statement.

Discussion Questions:

  1. Research two other service industry companies. What types of employee benefits do they offer their employees?
  2. Why don’t more service companies take the Starbucks approach to employee benefits?

The HR Pressure Cooker is Heating Up

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Santhosh Varghese/Shutterstock

Wages have always been at the forefront of any HR Department’s concerns, but it seems we are now approaching boiling point and that something may blow. Recruitment company Hays notes in its 2018 Salary Guide “a building pressure and awareness around compensation that [they] have not seen in previous years.” (Hays 2018 Salary Guide, p. 20.)

What does this mean for HR Departments? It is clear that they are feeling the pressure. Eighty-five percent say they want and need to improve their compensation plans in order to hire and retain top employees, but according to the Hays study, only 24% of HR Departments are allowed to offer more than a 3% compensation improvement.

Here is where the pressure is building for HR Departments — in recruitment. Compensation challenges and an inability to hire locally sourced talent is making it very difficult for HR departments.

The pressure is on, then, for HR to develop sophisticated, integrated strategies that address compensation levels, organization culture, and recruitment challenges. Perhaps HR professionals will increasingly need to show evidence-based research to convince senior leaders that they may have to increase their compensation budgets in the very near future.

 

Discussion Questions:

Research companies that lead the market with their compensation strategies. Identify why they have pursued these strategies.

Develop a 3-minute presentation to convince a Chief Financial Officer that an increase in the compensation budget is needed.

 

Is the Salary Question Awkward or Inappropriate?

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Sergey Fatin/Shutterstock

Should candidates be asked about their salary history as part of the screening and hiring process?

A recent article posted in Human Resources Director Canada cites an American push, in certain states, to ban asking candidates questions about their recent salaries as part of the recruitment process.

Click here to read the article.

It seems a curious thing to be asking about, in the first place.

From a best practice perspective, asking candidates about their salary history comes loaded with difficulties, especially in a Canadian HR context. As we have learned from our Recruitment and Selection studies, our focus as Human Resources practitioners is to ensure that the end-to-end hiring process is as neutral and objective as possible.

While the article speaks to the benefits of assessing a candidate’s monetary expectations, asking the question about how much money the candidate makes now is, in the opinion of this HR blogger, completely irrelevant.

Candidates are better served by having a clear and transparent understanding of the position requirements, the duties, the responsibilities, the expectations and the compensation range that will apply to the successful applicant in the position. It is the value of the position that pays the wage, not the value that is placed on the person applying for the job. This is why we have compensation related legislation in place including the Pay Equity Act of Ontario, the Employment Standards Act and, of course, the fundamental principles of equality and fairness outlined in the Ontario Human Rights Code.

If a candidate chooses to apply for a position that is at a lower compensation level than their current situation, that is their choice. The employer is not obligated to over-compensate the applicant, if they are hired, for making that choice. Similarly, if a candidate applies for a position at a higher rate than their current wages, the ethical employer will not (should not) pay lower than the pre-determined compensation level if that person is hired into that position as a result.

When there is a salary range linked to a position, that range should be the only determinant that sets the wage in order to ensure a fair and equitable assessment of mutual values.

Bottom line, some questions are just not worth the asking.

Discussion Questions:

  1. As a candidate, how would you respond to a question that probes your salary history during the interview process?
  2. What are the benefits to the HR practitioner in asking about candidate salary history?
  3. What are the perils to the HR practitioner in asking about candidate salary history?