The WorldatWork Handbook of Compensation, Benefits and Total Rewards

A Comprehensive Guide for HR Professionals

• Editore: Wiley
• Anno: 2015
• ISBN:
  9781119104339
• Edizione: 1
• Argomento: Business
• Categoria: Human Resource Management

Praise for The WorldatWork Handbook of Compensation, Benefits & Total Rewards

This is the definitive guide to compensation and benefits for modern HR professionals who must attract, motivate, and retain quality employees. Technical enough for specialists but broad in scope for generalists, this well-rounded resource belongs on the desk of every recruiter and HR executive. An indispensable tool for understanding and implementing the total rewards concept, the WorldatWork Handbook of Compensation, Benefits, and Total Rewards is the key to designing compensation practices that ensure organizational success.

Coverage includes:

• Why the total rewards strategy works
• Developing the components of a total rewards program
• Common ways a total rewards program can go wrong
• Designing and implementing a total rewards program
• Communicating the total rewards vision
• Developing a compensation philosophy and package
• FLSA and other laws that affect compensation
• Determining and setting competitive salary levels
• And much more

1

Total Rewards: Everything That Employees Value in the Employment Relationship

Fifty years ago, when a group of visionary professionals formed what was to become WorldatWork, the world of work and the world of pay were much simpler than they are today. Compensation was the primary “reward” and benefits, still in their infancy, were a separate and seemingly low-cost supplement for employees. The concept of combining these things—let alone using them with still other “rewards” to influence employee behavior on the job—was decades away.

Today we are only partially through an evolution from a largely industrialized business environment to a far more virtual, knowledge- and service-based environment, at least in North America and Europe. Among some major shifts:

• Business increasingly operates as a global village, with work moving to different parts of the world to take advantage of lower-cost labor and address skill gaps.
• Technology continues to revolutionize work, not only in terms of automating more jobs, but also in enabling the virtual workplace as more professionals conduct business in home offices or remote locations.
• Women are equally represented in the overall workforce, if not yet fully in the ranks of senior management.
• Traditional hierarchical distinctions have eroded in the name of faster decision making and speed to market. Teamwork is one of the most common behaviors rated in performance reviews.
• More businesses and business units in the United States are owned by European or Asian parents, which expect their practices and norms to be followed and respected in the workplace.
• Job mobility is taken for granted, with workers averaging six employers over the course of a career.
• Gender, race, and religious differences are a common part of most work environments. Diversity has become a respected value, demonstrated through a range of specific programs.
• Business leaders increasingly regard employees as drivers of productivity, rather than as relatively interchangeable cogs in a larger wheel.
  Along with these changes have come dramatically different views about the nature of rewards. In the shift toward a more knowledge- and service-based economy, the relationship, or deal, between employer and employee began to evolve as well. Viewing employees as performance drivers meant thinking differently about what it would take to attract, keep, and engage them in giving discretionary effort on the job. And so total rewards entered the lexicon to address these needs.

BROADENING THE DEFINITION OF TOTAL REWARDS

The definition of total rewards always sparks debate. For example, Figure 1.1 includes a comprehensive list of items that have shown up at one time or another in one company’s definition of total rewards. From this, it is easy to see how people can use the term in conversation only to find that they are referring to very different notions.

Generally speaking, there are two prevailing camps of definitions:

• Narrow definitions. These virtually always comprise compensation and benefits, and sometimes include other tangible elements (e.g., development). This sometimes is referred to as total compensation or total remuneration.
• Broad definitions. These can expand to encompass everything that is “reward ing” about working for a particular employer or everything employees get as a result of their employment. Sometimes terms such as value proposition or total value are used interchangeably with total rewards.

While the narrower definitions have been around for a long time, it is the broader notion that is generating buzz. (See Sidebar 1.1.) Indeed, much of the current activity in total rewards involves companies moving to a broader definition. There are several reasons for this:

• Erosion of the “core” elements of the package. The traditional elements of rewards— pay, benefits, and stock awards—are no longer differentiating factors for organizations. The competitive position for pay is trending toward median or mean. Benefits costs continue to rise. Stock programs, such as the distribution of options, do not offer the appeal they once did. Given all of this, a logical response is to broaden what companies provide for the overall employment package.
• Pressure for operational efficiency and effectivenesss. Total rewards can represent a major cost element. As companies seek to manage costs tightly, there is more emphasis on ensuring that all costs are counted and managed. By redefining rewards more broadly and focusing on those elements that achieve the biggest payoff, organizations can drive toward efficiency.
• Catering to diverse needs. Companies today are managing a much more heterogeneous population. For the diverse workforce, no single component becomes a value driver. Employees have choices to make and a need for greater flexibility. A broad definition of total rewards helps employers show how their slate of rewards responds to the broad needs of today’s global workforce.
• Need to more strongly reinforce business strategy. Companies are concerned about sending clear business messages to employees. A properly structured total rewards package sends a key message—by aligning all the components of total rewards with the overall business vision, a company ensures its workforce is on the same page.

FIGURE 1.1Total rewards: different things to different employers.

Given these factors, it is not surprising that a broader definition is gaining favor in the marketplace. Companies still need to decide how broadly they want to define total rewards, based on what they can adequately measure and manage.

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Sidebar 1.1: How We Def...