Compensation

Compensation? Do Tell!

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What do employees want to know about compensation?

Close-up Of Businessman Hands Giving Cheque To Other Person In Office
Andrey_Popov/Shutterstock

What makes compensation effective? Employers, do you really want to know? The secret is that employees just want to know. They don’t necessary want to know everyone’s wages but they do want to know how the compensation system works in their organization.

Most organizations are afraid to talk about compensation. It is almost like politics and religion, which are not usually talked about in public. However, like any topic that is not discussed in the workplace, misinformation breeds like a wildfire. Misinformation leads to assumptions and workplace assumptions are usually incorrect, which can lead to organizational frustration.

A study by Peter LeBlanc shows that effectively communicating your compensation system will benefit your organization.

Click here to read about the study.

According to the study, the best way to communicate your compensation systems is to, “Keep it personal, interactive and it is best presented one on one from the employees direct manager.” Furthermore, the study also found that “…at all income levels…the more knowledge our study participants have about their pay system, the more likely they are to be satisfied with their pay and engaged at work.”

The shroud of secrecy over workplace compensation needs to be lifted, and open one-to-one communication encouraged so an employee’s supervisor can pave the way.

Discussion Questions

  1. If information about compensation is best presented to the employee by their manager, what role can HR play in supporting the communication roll out strategy?
  2. Develop an outline of a training program for managers to discuss compensation with their employees.

Perils of Pay Equity

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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.