Exploring Total Rewards in 2021 and Beyond - PG. | 12 - Educating and Inspiring the World at Work - WorldatWork
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Educating and Inspiring the World at Work NOVEMBER/DECEMBER 2020
| NOVEMBER/DECEMBER 2020
A Member Publication
THE RIGHT STUFF
Exploring Total
Rewards in 2021
and Beyond
PG. | 12
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November/December 2020
Educating and Inspiring the World at Work Vol. 63, No. 6 ISSN 1529-9465
WorldatWork is the leading nonprofit professional
association in compensation and total rewards. We
serve those who design and deliver total rewards
programs to cultivate engaged, effective workforces
Editorial WorldatWork Association Board that power thriving organizations.
We accomplish this through education and
Publisher Lead Director certification; idea exchange; knowledge creation;
WorldatWork Sara R. McAuley, CCP, WLCP information sharing; research; advocacy; and
affiliation and networking. Founded in the United
Editor-in-Chief McAuley Consulting Group
States in 1955, today WorldatWork serves total
Dan Cafaro Secretary/Treasurer rewards professionals throughout the world
working in organizations of all sizes and structures.
Managing Editor Jeff Chambers, WLCP
Mark McGraw Campbell and James WorldatWork Society of Certified Professionals®,
the Certified Compensation Professional® (CCP®),
Contributing Editors Directors Certified Benefits Professional® (CBP®),
Global Remuneration Professional (GRP®),
Brett Christie Scott Cawood, Ed.D., CCP, CBP,
Work-Life Certified Professional® (WLCP®),
Jim Fickess GRP, CSCP, WLCP Certified Sales Compensation Professional (CSCP)®,
Brittany Smith WorldatWork Certified Executive Compensation Professional
(CECP)® and Advanced Certified Compensation
Mary Lynn Fayoumi
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Linda Larson
Alan Gardner
Contributing Writers Verizon Communications (retired) Workspan Vol. 63, No. 6/November/December
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| November/December 2020
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table of
contents
Features
18
An Unconventional Climb
Talent Mobility When There Is No Ladder
Employees are engaged and feel valued when
their organizations help them grow professionally.
Could internal “gig” work be the answer?
By Anita Bowness
24
Resetting the Salary History Conversation
How to Establish Pay for New Hires
The hiring process is much more successful
PHOTO © ISTOCK/IMIJALOFF/MARIIA VASILEVA/SOLARSEVEN
when employers are open about compensation
and unaware of applicants’ prior pay.
By Mark McGraw, WorldatWork
28
A Sticky Conversation
Training Managers on Tough Comp Discussions
A failure to properly train managers on how to
have tough conversations about compensation
could blow up in an organization’s face.
By Bethanye McKinney Blount
34
The Puzzling Question of a Career Path
Aligning Rewards Strategy with Talent Strategy
12
As employees try to find their own way to a
new position within an organization, their path
Cover Story is not straight or linear.
THE RIGHT STUFF
By Robert J. Greene, Ph.D.
Exploring Total Rewards in 2021 and Beyond 40
The lessons learned in 2020 will shape companies’ Strategic Compensation and Talent
approach to total rewards for years to come. Management in the Midst of COVID-19
By Catherine Hartmann, Jackie Stuedemann, Companies must carefully consider which
and Benjamin Viney forms of compensation will appeal most to
their employees.
By Jed DeVaro, Ph.D.,
California State University, East Bay
Sponsored Content 46
Recognized and Rewarded
| November/December 2020
06 New Program Boosts Engagement
at Gables Residential
Eye on the Future of Executive Compensation Programs Reward and recognition programs do
By Blair Jones and Todd Sirras, Semler Brossy Consulting Group
provide measurable benefits, when they’re
designed properly.
By Michael Levy and Philip Altschuler
ARTICLE REVIEWERS
Barbara Anderson, Walmart Craig Kams, Stephanie Parcus, Watch videos, download white papers,
Skyworks Solutions Inc. Willis Towers Watson participate in the Online Community
Christopher Haak, CCP, GRP, www.worldatwork.org/workspan.
Holman Enterprises Scott Kaplan, SoftServe Priyanka Ponnappa, GRP
2
November/December 2020
Departments
5 52 72
From the Editor Back to Basics Future Look
It’s Time to Leave the Principles of Human Capital Skills Will Be the New
Capsule if You Dare Measurement and Disclosure Measure of Base Pay
By Dan Cafaro, WorldatWork By Don Delves & Shai Ganu By Brett Christie, WorldatWork
6 54 79
Letter to the Editor HR Tech Drive NSFW
Compensation Solutions It’s the Thought that
8 for Stressful Economic Times Counts … No, Really
Leadership at Work By Tom Starner By Charles Epstein
It’s Up to You, New Work, New Work
By Scott Cawood, Ed.D. 60 80
Member Central Research in Brief
10 Nancy Day: An Educator Looks Back on Are Salary History Questions
Voices in the Profession Three Decades in the Classroom Going Out of Style?
McDonald’s Serves Up Lessons
for Compensation Committees 66
and Board of Directors Around the Globe
By Anil Agarwal Reevaluating Total Rewards Strategies
for the Growing Remote Workforce
By Steve Brink
stat
rack
In comparison to reskilling an existing employee
to perform a different role in the organization,
hiring externally costs
18% to 20% more,
and these outside hires perform at a lower level
through the first two years on the job.
page 73
89 %
| November/December 2020
While 76% of
executives think
talent mobility is
an important priority,
of employees report the same just 6% say their organization is
or higher levels of productivity excellent at moving people from
working from home since the role to role within the enterprise.
onset of the coronavirus pandemic.
page 21
page 8
3
letters
to the editor
STATEMENT REQUIRED BY ACT OF AUGUST 12,
I just wanted to write and let you know the articles lately have 1970, SECTION 3685, TITLE 39, UNITED STATES
CODE SHOWING THE OWNERSHIP, MANAGEMENT
been so amazing and incredibly applicable, especially in today’s AND CIRCULATION FOR WorldatWork workspan,
USPS publication #5060. PUBLISHED MONTHLY
climate. I’ve saved three articles for future reference and shared AT 14040 NORTH NORTHSIGHT BOULEVARD,
SCOTTSDALE, AZ 85260-3601.
the virtual work article with my department. Keep up the great The name and address of the Publisher is:
Scott Cawood, WorldatWork, 14040 N. Northsight
work with the great material! Workspan is becoming one of my Blvd., Scottsdale, AZ 85260-3601. The name
and address of the Managing Editor is: Dan
go-to resources for information and tips. Cafaro, WorldatWork, 14040 N. Northsight
Blvd., Scottsdale, AZ 85260-3601. The name
and address of the Editor is: Dan Cafaro,
WorldatWork, 14040 N. Northsight Blvd.,
Thank you, Scottsdale, AZ 85260-3601. The name and
address of the Owner is: WorldatWork, 14040 N.
Melissa DiNoto, PHR, SHRM-CP Northsight Blvd., Scottsdale, AZ 85260-3601.
The known bondholders, mortgagees, and other
Compensation Manager security holders owning or holding 1 percent
or more of total amount of bonds, mortgages,
Washington State University or other securities are: None. The tax status
for WorldatWork: Has not changed during the
preceding 12 months.
Educating and Inspiring the World at Work MARCH/APRIL 2020 Educating and Inspiring the World at Work MAY 2020
The average number of copies for each issue
during the preceding 12 months are:
| MARCH/APRIL 2020
| MAY 2020
A Member Publication A Member Publication
A. Total number of copies: (Net press run.) ... 15,259
B. Paid circulation:
– Paid or requested mail subscriptions... 13,694
– Paid in-county subscriptions.......................... 0
– Other Non-USPS paid distribution.......... 1,284
– Other classes mailed through the USPS ....... 0
BEYOND COMPLIANCE
UNDER PRESSURE
C. Total paid distribution ............................... 14,978
Free distribution by mail: samples,
complimentary and other free copies ............ 98
D. Free distribution outside the mail:
Managing Chronic Workplace Stress carriers or other means ...................................... 1
E. Total free or nominal rate distribution ..............99
F. Total distribution ....................................... 15,077
G. Copies not distributed ................................... 182
Beyond Compliance
WORLDATWORK.ORG
WORLDATWORK.ORG
H. Total: ........................................................... 15,259
Spotting Global Trends Around Fair Pay
– Percent paid and/or requested ................. 99%
C1_March20_FINAL.indd 1 2/10/20 2:28 PM C1_WAW-MAY20-Cover_P3.indd 1 4/10/20 12:14 PM
The actual number of copies of single issues
Educating and Inspiring the World at Work JUNE/JULY 2020 Educating and Inspiring the World at Work SEPTEMBER 2020
published nearest to filing date:
A. Total number of copies: (Net press run.) ... 12,782
| SEPTEMBER 2020
| JUNE/JULY 2020
B. Paid circulation:
A Member Publication A Member Publication
– Paid or requested mail subscriptions... 12,599
– Paid in-county subscriptions.......................... 0
– Other Non-USPS paid distribution................. 0
– Other classes mailed through the USPS ....... 0
CLOSING THE GENDER PAY GAP ... PERMANENTLY
C. Total paid distribution ............................... 12,599
| November/December 2020
SCULPTING MOTIVATION
D. Free distribution by mail: samples,
complimentary and other free copies ............ 73
E. Free distribution outside the mail:
carriers or other means ..................................... 0
F. Total free distribution or nominal
SCULPTING Closing the Gender Pay Gap...
PG. | 12
rate distribution ................................................ 73
Motivation
Behavioral Science and Its Role in Total Rewards
PERMANENTLY G. Total distribution ....................................... 12,672
H. Copies not distributed .................................... 110
WORLDATWORK.ORG
WORLDATWORK.ORG
I. Total: ........................................................... 12,782
PG. | 22
ESG Metrics
PG. | 56
Facilitating PG. | 38 PG. | 50 – Percent paid and/or requested ................. 99%
& Exec Comp Meaningful Work The IPO Game Investing in Parents
C1_WAW-JunJul20-Cover_P3.indd 1 5/8/20 10:24 AM C1_WAW_SEPT20_Cover_FINAL.indd 1 8/11/20 11:32 AM
4
from
the editor
‘It’s Time to Leave the
Capsule If You Dare’
This year-end issue of Workspan emphatically slams and locks the door on 2020 and
examines The Big Picture for 2021 and beyond. The cover story sets the stage for a
post-pandemic world by addressing a myriad of total rewards topics — from flexible
benefits and work options to integrated well-being programs that use robust data
and tech to deliver a highly personalized, purpose-driven employee experience.
“The Right Stuff” asks the right questions:
• What does the future of work look like?
Dan Cafaro • How are jobs changing and how are needs evolving?
Editor-in-Chief of Workspan
• How will this affect career progression?
magazine. He can be reached at
dan.cafaro@worldatwork.org.
“The Right Stuff” also examines today’s human capital priorities, such as reskilling,
enhanced development opportunities, and the elements that employees say they
value most and least in the total rewards portfolio.
An astronaut exploring uncharted territories is an apt analogy for the challenges
engulfing the TR profession. As we all can attest, there is no such thing these days
as business as usual. The idea of employing a lattice instead of a ladder to envision
a person’s career trajectory is spot-on. (See “An Unconventional Climb” and “The
Puzzling Question of a Career Path.”)
With perpetual change becoming the norm everywhere you look, job interviews
also are no stranger to fundamental transformation. Salary history bans are rapidly
becoming prevalent — and, in a growing number of states and cities, the law of the
land. What used to be a primary driver in helping to determine a candidate’s starting
salary is no longer on the table. (See “Resetting the Salary History Conversation.”)
Training managers on how to conduct difficult compensation discussions is an
evergreen topic that remains essential, chiefly because of the trend toward pay
transparency and easily accessible streams of salary data. Clear and concise commu-
nication, as always, is paramount. (See “A Sticky Conversation.”)
Recognition too is a tool to help boost employee engagement, loyalty, and trust, as
illustrated by the rollout of a new program at Gables Residential. (See “Recognized
and Rewarded.”)
Finally, as you look toward the future and wonder how you singlehandedly can have
| November/December 2020
the greatest impact on the world of work, it would behoove you to listen. Simply
listen to your employees. Allow them to shape and reshape your culture and talent
management plans so that they feel tethered to the mission, strategy, and success of
your organization.
The world of cyberspace is a lot friendlier and less lonely for voyagers when they
feel connected to ground control.
5
S P O N S O R E D CO N T E N T
Eye on the Future
of Executive Compensation Programs
BL AIR JONES AND TODD SIRR AS
SEMLER BROSS Y CONSULTING GROUP, LOS ANGELES & NE W YORK CIT Y
Thinking longer-term is difficult when the Like past crises, the Covid pandemic and
national turmoil related to racism and gender
world turns upside down. Executive pay is no
inequality will introduce new thinking about
exception. Our focus narrows to the items in pay and performance and permanent shifts in
front of us and getting past current obstacles. “how executive pay works”. Today’s executive
Eventually we focus on getting “back on compensation landscape has been shaped by
past significant events and will be further
track” when the existential risk passes or we
molded by this year’s events.
get used to it, and the new “normal” gets
Enduring evolution and change beyond this
shaped by these prior experiences.
year are likely in four areas.
EVENT > LED TO > AND THIS LASTING EXEC PAY IMPACT
Enron/ Sarbanes-Oxley • Reduced discretion
WorldCom 409A • Significant reduction in deferred compensation
programs
• Focus on governance risk
Dotcom Stock Option • Rise of PSUs for executives
Crash Expensing/FAS 123 • Rise of RSUs for broad-based awards
| November/December 2020
• Decline of stock options
Financial Dodd-Frank • Homogenization of pay program expectations
Crisis and prominence of proxy advisors
• Independence of board advisors
• Say on Pay
• Relative TSR and 3-year performance measures
• Compensation risk reviews
• Clawbacks
• Shareholder outreach
6
S P O N S O R E D CO N T E N T
1. Increase in strategic and non-financial PROGNOSIS: Discussions begin in 2021 for 2022
goals, including ESG and Human Capital changes. A slower moving trend, perhaps until the
next crisis.
Management
This is too big a topic to expect major changes
PROGNOSIS: Large prevalence uptick in 2021
in a short window. Performance shares have an
programs; further increases in later years
under-appreciated mismatch between true range
This trend was evolving, but the pace has picked
of outcomes and recipient expectations. When
up dramatically. Corporate responsibility for
outcomes are above or around target, this trade-off
employee wellbeing, social justice, environment-
feels acceptable, but 2020 demonstrates the
al protection, and stakeholder responsibility is a
inherent riskiness of an equity program that is
major platform for key institutional shareholders.
PSU-dominant. We suspect that equity mix will
We expect new models and measurement
evolve gradually towards more balance, with a
approaches to emerge in the 2021 proxy season.
greater appreciation for PSU risk.
Trends typically filter down from largest companies,
but we suspect a higher-than-normal adoption 4. Reshaping of incentive curves to
rate and innovative approaches in both large and introduce tolerance in goal setting
mid-sized companies.
PROGNOSIS: Will vary with perceived uncertainty
2. Increased discretion in pay decisions and recent experience. 2020 events will create more
gradual curves in 2021 programs and permanent
and normalization of expectations
changes over time.
PROGNOSIS: Major element in 2020 that will
The incentive formula may be the most critical
lessen but endure in later years. Increased and more
factor after measure selection to build programs
fulsome disclosure will be immediate. Expectations
that are appropriately sensitive to performance
about structure of discretion and expected disclosure
and feel fair to participants and shareholders.
will normalize over time.
Traditional incentive programs are linear, i.e., the
A disconnect exists between issuers and
amount earned changes at a fixed slope with
shareholders/proxy advisors over the use of
performance. The line often is steeper above
discretion. Issuers generally think that discretion
target, and programs with additional changes in
is the “D-word” to shareholders and proxy
slope are uncommon. We may see more use of
advisors. However, these same shareholders
more gradual performance curves, multiple
generally agree that discretion should be exercis-
changes in slope around “expected” performance,
ed but want more of the “why” in the proxy
increased prevalence of discretionary modifiers to
instead of “what” and “how”. Institutional
financial results, and/or adjustment factors and
shareholders have set the expectation this year
“collars” that change the shape of the incentive
that discretion is completely appropriate, with
curve based on macroeconomic variables.
a request for more direct and clear disclosure.
The SEC has implored issuers to provide as Boards and management must think about long-term
much insight as possible into all shareholder implications of 2020 on their strategy, forecasting
communications1. Will this be the year when ability, and the incentives they want to provide.
| November/December 2020
the SEC’s quixotic quest for “plain English” Managing and guiding corporations through periods
disclosure finally gets a win? We hope so. of tremendous social, political, and geopolitical risk
requires near-term action in conjunction with
3. Fundamental re-thinking, with long-term planning for a “new normal”.
shareholder input, of the risk/reward
equation in long-term compensation
For more information, visit us at SEMLERBROSSY.COM
or contact Blair Jones, Managing Director at bjones@
1 https://www.sec.gov/news/public-statement/statement- semlerbrossy.com and Todd Sirras, Managing Director,
clayton-hinman at tsirras@semlerbrossy.com.
7
leadership
at work
It’s Up to You,
New Work, New Work
By Scott Cawood, Ed.D.
Perhaps I miss living in New York City, but each time I say COVID-19 suddenly forced many of
New Work, I can’t help but smile, because my mind just us to work from our homes, garages,
automatically gravitates to the “New York, New York” song by basements and living rooms. Before
Frank Sinatra. the pandemic, and despite digitali-
Thinking back to easier times—like the end of 2019—we zation, many organizations still were
were anticipating the continued shifts in trends we had been reluctant to offer a more flexible and
monitoring about how, when and why we work. Hierarchy was remote environment, mostly based on
| November/December 2020
getting a bit flatter, people were inquiring more on the values fears of decreased productivity and
held by organizations, remote work was gaining in popularity lack of control.
and the expectations for rewards at work broadened past With COVID-19, most have seen those
compensation and benefits. The shifts on work and workplaces fears disappear. In a recent WorldatWork
that were taking place while the world seemed busy working survey, for example, 89% of respondents
didn’t necessarily rise to the level of urgent national news. reported the same or higher levels of
Perhaps that is how trends work, they just show up and it productivity working from home.
is now how we do business. Work and workplaces are often
written about, but perhaps all these changes did not stand out What New Work Means
because they seemed incremental. Pre-pandemic, we already had seen
Until they weren’t. rewards elements — other than salary
8leadership
at work
COVID-19 has certainly proven that long office hours for a robust
paycheck is not all that matters. People are redefining their
careers and the things that truly matter to them.
— quickly increasing in perceived value among employees and organizations. For the past nine
and influencing their decisions whether to accept or stay in months, we have demonstrated that we
certain job opportunities. The pandemic is not responsible for are perfectly capable of working and
New Work; it was already unfolding in front of us. And while connecting from any place in the world.
we had expected to continue modifying how we work in 2020, We have been able to deliver results with
the jolt showed us what was possible. It gave us a fresh look flexible schedules and without the normal
at the future of work. levels of oversight we thought we needed.
New Work will be more human. It will be all digital. Less reac- We have prioritized people and well-
tive. Super-fast. Data-driven. Consumer-friendly. Values-laden. being, their safety and the safety of their
Less personal and more personal at the same time. Redefined. loved ones. And because of that, New
Anti-complexity. Socially aware. Equity-focused. Intensely Work is the currency that will both shape
networked. Less political. Very transparent. and engage workers.
COVID-19 accelerated the changes and value people place on And we should not retreat.
things like well-being, flexibility, non-traditional benefits, lead- COVID-19 has certainly proven that long
ership, purpose and meaning, culture and belonging. office hours for a robust paycheck is not
Particularly during these times, safety and well-being have all that matters. People are redefining
become more important. Health insurance has been ranked their careers and the things that truly
as the most important benefit by most employees, followed matter to them. They are looking to enjoy
by paid time off, ability to work remote and mental health themselves as they place a higher value on
programs. Individual fears for physical, emotional and finan- their well-being, because they now realize
cial safety have changed essential employees’ priorities. that it can all be taken away by an external
Comfort used to be perceived as professional growth force such as COVID.
opportunities and on-site perks. Today, comfort means one As we plan for the upcoming months
thing: safety. Preliminary results from the WorldatWork Talent and years, whether we are back in the
Currency survey, for instance, show that 56% of respondents office or have opted for a reduced onsite
will not work somewhere that does not make them feel safe. workforce, we will have an opportunity to
maintain momentum. We will have options
Is New Work Here to Stay? to extend trust or utilize control. I hope
Leading through the pandemic is crucial to the success of you choose trust.
organizations moving forward. Yet, we should not let it be Take the time now to learn about the
| November/December 2020
what defines 2020, as there are things we will lose and gain newly defined currency of what matters
which will help us in the future. This includes being faster and to people who work — it isn’t all about
more aware of how people need to be cared for and engaged. title, pay, and moving up the corporate
Only to the extent that leaders create meaningful connec- ladder anymore. We were already
tions and well-being in this disrupted and digital world will starting to aim higher before COVID,
we be able to increase our employees’ potential and ability to and I hope we can embrace New Work
sustain. Purpose and alignment become critical, and looking and help the world be a great place to
deep into our organization’s core values to make sure we live live and work.
and breathe by them has become fundamental.
New Work is here to stay not because of COVID-19, but because Scott Cawood, Ed.D, CCP, CBP, GRP, CSCP, WLCP, is the
CEO of WorldatWork.
it had already been manifesting itself within our workforces Scott Cawood, Ed.D.
9voices in
the profession
McDonald’s Serves
Up Lessons for Comp
Committees and Boards
By Anil Agarwal
PHOTO © ISTOCK / JETCITYIMAGE
| November/December 2020
President Reagan popularized the phrase “trust, but incentive plans, approving employ-
verify” in America. ment terms, etc.
“Trust, but verify” came to my mind when I heard about There are many gray areas when it
recent news of McDonald’s suing its ex-CEO to reclaim sever- comes to assessing data or information
ance paid to him. A publicly held company’s board members that should be shared with a company’s
rely heavily on management to provide complete and correct compensation committee, and these
information when making decisions, including approving decisions are generally made by the
annual cash bonuses, certifying results under long-term CEO, CFO, general counsel, the CHRO,
10voices in
the profession
The executive compensation field is full of land mines related to
accounting, legal and disclosure issues. A company runs the risk
of not complying with some of these rules if one person or group,
such as HR, makes a decision without notifying ... other groups
such as finance.
finance and/or HR. In many instances, one person, such as the • If an exception to policy or employment
CHRO, or a group, such as finance, makes a decision without terms is requested for a key senior role,
other interested parties even knowing about decision points are there other executives or other
or gray areas. employees who would fall into the
In most cases, the underlying issue in front of a compensa- same category?
tion committee impacts a large number of executives or all • If a change to policy is proposed, how
employees. For example, annual bonus pool determination would senior executives benefit from
based on adjusted-EPS impacts hundreds or thousands of such a change?
employees at a Fortune 500 company. • Are there disagreements between
In these situations, risk of providing wrong or incomplete management on policy interpretations
information to the Board is extremely limited because or administration?
decisions are generally based on GAAP-reported results • Are all staff functions aware of all the
or non-GAAP results that are widely discussed on earnings issues, including exceptions to ensure
calls or disclosed in the proxy statement. Therefore, risk of a all reporting compliance?
McDonald’s-type situation arising is extremely low.
The real risk arises when a board or compensation committee The executive compensation field is full of
is approving compensation terms for a key individual, specif- land mines related to accounting, legal and
ically CEO, CFO, CHRO or general counsel. I specifically call disclosure issues. A company runs the risk
out these roles and not all Section 16 roles because CEO, CFO, of not complying with some of these rules
CHRO, and general counsel generally decide, either individually if one person or a group, such as HR, makes
or collectively, which information is relevant to share with the a decision without notifying, intentionally
compensation committee. or unintentionally, other groups such as
There is also some conflict of interest, because the infor- finance. Therefore, all staff groups should
mation provided by the CFO, CHRO, and/or general counsel apply the same level of due diligence as
impacts the CEO’s compensation. In return, the CEO signifi- suggested for compensation committees to
cantly influences compensation decisions for the CFO, CHRO ensure full and timely compliance.
and general counsel. In summary, McDonald’s story is another
| November/December 2020
The compensation committee’s stakes are even higher when reminder that independent board members
they are approving hiring or termination-related compensation should be extra vigilant when reviewing
terms for these key roles. This is because these events are and approving compensation terms for
one-offs, involve large amounts of money, include many gray all executives and this burden increases
areas and carry significant risks — intentional or unintentional significantly when reviewing CEO, CFO, CHRO
— of management not sharing complete or correct information and general counsel compensation. Trust,
with the compensation committee. but verify and then verify again!
In these situations, compensation committees should be extra
careful and ask a number of probing questions before approving Anil Agarwal is a total rewards professional with
broad industry and consulting experience. He can be
proposed terms. I have listed below a few questions/scenarios reached at anilnikita@yahoo.com.
to provide examples to guide compensation committees: Anil Agarwal
1112
| November/December 2020EXPLORING TOTAL
REWARDS IN 2021
AND BEYOND
BY CATHERINE HARTMANN,
JACKIE STUEDEMANN, AND
BENJAMIN VINEY
W
atershed moments are rare, and they
have significant implications.
2020, however, delivered no shortage
of pivotal events: a pandemic,
extreme economic challenges, political and social
unrest, and a clear demand for new ways of
moving forward.
The reverberations from these pivotal events will
be felt for years to come. And important lessons
will continue to emerge from the chaos that
2020 has wrought.
These lessons will shape the path of a markedly
different world. Organizations have been forced
to review their operating models, redefine ways of
working, revisit total rewards designs and update
their people strategies. Never has it been more
important to optimize total rewards to manage
costs while simultaneously restoring employees’
sense of stability.
| November/December 2020
A New Approach to Rewards
Given that total rewards is one of a company’s
largest controllable spends, few organizations can
afford not to ensure their programs offer the most
value for the investment. As with any monumental
moment, lessons learned are key to understanding
how to move forward. For example, several coping
approaches companies used to manage through the
crisis have fundamentally changed the way some
organizations approach work.
13
© 2020 WorldatWork. All Rights Reserved. For information about reprints/re-use, email copyright@worldatwork.org | worldatwork.org | 877-951-9191.Consider flexible work options, which have Employee benefits became more of a focal point,
frequently been met with cultural resistance in the with organizations recognizing the importance of
past. However, 2020’s forced flexibility proved these inclusive and purpose-driven benefits that meet
arrangements can be highly productive. It also employees where they are; it became clear that
reflected a boost in engagement when managed “one-size-fits-all” wasn’t personalized enough to
effectively — even among employees challenged deliver engagement.
with managing their children’s remote learning or Career enablement moved beyond pure mentor-
having less-than-ideal workspaces in the home. ship and gained momentum into a vision of how
Increased use of technology has been necessary recruiting, acquisition, retention and development
to effectively deliver on total rewards programs. work together to promote diverse leaders.
A focus on how employers connect and commu- A focus on well-being, specific to safe workplaces,
nicate with talent will remain imperative as more is helping employers embrace psychological safety,
employees continue working remotely, and an as well as increased emphasis on employees’
increasing number of organizations announce plans emotional, health and financial security in a world
to continue a full-population, work-from-home of isolation and economic uncertainty.
status through 2021 — and maybe beyond. And these elements of total rewards become
The changing nature of work has compelled orga- especially important when promoting social aware-
nizations to clarify which key roles and skillsets are ness about how companies treat their workers and
needed to thrive in the future. New opportunities how they interact with their communities.
to reskill and redeploy talent have created an
increased opportunity for employee growth and The Path Forward
development — while at the same time leading to As businesses move toward restoring stability and
the elimination or evolution of many familiar roles. learning to function in a new world, it is critical to
review how total rewards can support organiza-
tional sustainability while also shaping an employee
experience that drives success. Several consider-
ations can help prioritize where to fine-tune (or
It’s critical to assess even revamp) total rewards programs and practices.
It’s critical to assess total rewards in terms of the
total rewards in terms of organization’s priorities and purpose. Total rewards is
the organization’s priorities a key component of the “give and get” that defines the
PHOTO © ISTOCK/IMIJALOFF/MARIIA VASILEVA/SOLARSEVEN
employment deal. For instance, if an organization’s
and purpose. strategy is to shift beyond a basic need to balance
cost containment with investing in growth, the
approach to total rewards should shift as well.
There are total rewards attributes that drive a
| November/December 2020
high-performance employee experience at three
2020 also reinforced the importance of a renewed levels: Essentials, Emphasis and Excellence.
commitment to inclusion and diversity. A strong focus Companies that perform better focus their priorities
on environment, social responsibility and governance across these levels — keeping in mind that you
(ESG) emerged at the board level, with this focus don’t have to be excellent at everything.
filtering down to all aspects of total rewards. When setting strategy, ask critical questions.
Within compensation, for example, the impor- For example, “What do I want employees to say
tance of and need for pay-equity assessments about total rewards within my organization?” From
that evaluate program design from a gender, a business standpoint, where is it good enough
sexual orientation and race perspective became to operate at the Essentials level, and where is it
even more evident. critical to be Excellent? Applying this model to total
14My Total Rewards...
Essentials Emphasis Excellence
Informed Engaged Empowered
Are clear and understandable Compel me to take action Inspire me to be my best
Competitive Differentiated Personalized
Are comparable to companies like ours Reflect the needs of me Are tailored and customized to meet
and my colleagues my unique needs
Accessible User Friendly Optimized
Are there for me Are easy to find, access and use Provide proactive support for the best
experience and results
Foundational Relevant
Include a wide range Work seamlessly together and Purpose-driven
of separate programs are valuable to me Align with a greater meaning, inspiring
how I work and live
Compliant Creative
Check the box on required standards Expand beyond just my essential needs Agile
Grow with me as I evolve
rewards allows you to better prioritize where you evolving? How will this affect career progression?
place your bets. If “normal” is going to be different, it is reasonable
If ensuring that total rewards programs are clear to assume the workforce strategy must change to
and understandable is a priority, optimizing at the accommodate future needs? In turn, total rewards
Essentials level requires a communication strategy programs must be designed with agility in mind to
that more effectively focuses on education and support changes in how work and organizational
packaging program information, tools and resources. design has shifted.
If better employee engagement with total rewards Scenario planning work and total rewards for the
programs is a priority, optimizing at the Emphasis future can help bridge the gap between restoring
level can translate into using technology-enabled stability to effectively managing post-pandemic.
data analysis to understand how employees are Rather than thinking about the “jobs” that need
motivated, and then aligning this understanding to be done, consider the skills that are needed to
with key behaviors. support the way work gets done. This will require
If empowering employees to be their best is upskilling, reskilling and, in some cases, outskilling.
a priority, optimization may call for integrated For example, organizations have realized that
well-being programs that use robust data and tech- it’s critical to define where great performance
nology to deliver a highly personalized, Excellent matters most, as well as talent supply and
experience that links to purpose at multiple levels demand dynamics.
— individual, organizational and community. Do capabilities around coding, artificial intelli-
Align total rewards with how work gets done and gence, customer care, relationship management,
talent gaps. Developing an effective total rewards data mining, supply chain or logistics need more
strategy and program requires an understanding of the focus? What are the implications for talent? Do
| November/December 2020
work that was done in the recent past, how work transi- capability sets need to shift or come from more
tioned during the pandemic and what work will need to external resources? How does this affect the total
be done moving forward. For example, employers were rewards approach? And how readily available is that
looking toward automation and hypothesizing about talent in the marketplace?
the future of work before the pandemic began. A one-size-fits-all approach no longer works (if it
COVID-19 has accelerated this work for many ever did), giving way to segmentation. Every organi-
organizations, and as employers think about a zation has multiple and differing demographics and
post-pandemic world, there is a focus on resiliency work groups — and employees within those groups
and sustainability. have differing attitudes and preferences.
For instance: What does the future of work look One segment may need reskilling (thus, a
like? How are jobs changing and how are needs total rewards portfolio that includes enhanced
15development opportunities or educational assis- require more innovative ways of delivering and
tance is right) while another segment may require engaging employees with specific financial tools
updated policies that expand flexibility in how and resources. This can mean using data to provide
employees prefer to work (e.g., work location, personalized information via a portal that nudges
hours), especially given the long-term reality of individuals toward certain actions based on their
remote work at many organizations. unique spending and saving habits.
Equally important is identifying critical behaviors Many employers designed programs in 2020
that will drive business success, and then ensuring for essential workers differently from those for
that total rewards programs drive those behaviors. non-essential employees, and this continues
This is best accomplished with a design-thinking to present a dichotomy in the workplace. If one
approach. Leveraging this cognitive, strategic and employee segment is onsite and another is working
from home, how do programs help minimize the
“us vs. them” mentality? If perceptions of inequity
are a challenge, optimization will mean continued
targeted program design for varied needs, as well
HR is in a unique position as focused communication, including manager
to draw insights from enablement and leadership training.
Understanding employee needs — and how
trusted data to help make they differ across a diverse, multigenerational,
smarter decisions. geographic and segmented workforce — is critical
to getting total rewards right. Combining employee
insights with financial data helps allocate the total
rewards investment in the most cost-effective way.
Plus, when leveraging technology, organizations can
evaluate differences in preferences similar to a tradi-
practical process, define desired outcomes and tional conjoint survey — measuring what employees
behaviors first, then identify programmatic implica- value most and least in the total rewards portfolio —
tions that support those outcomes and behaviors. and looking at the impact of those preferences across
Applying design thinking to test your total segments. For example, the tradeoff might be getting
rewards and keeping it agile on an ongoing help with student loan repayment in exchange for less
basis — review, build, implement, adjust, repeat time off, or taking a smaller salary increase to have
— ensures alignment to your ROI goals while also more money available for retirement.
driving an enhanced employee experience in a “It takes a tremendous amount of knowledge
changing world. about the business and good data to tell you what
your real needs are, and where you should be
Supporting Your Employees’ focusing your time,” said Melissa Kremer, executive
Evolving Needs
| November/December 2020
vice president and chief human resources officer
The degree to which employees will value and use at Target, in The Future Chief People Officer Study,
total rewards changes based on individual life situ- from SHRM’s Executive Network, HR People +
ations as well as current events. Strategy (HRPS) and Willis Towers Watson.
For example, employees’ sense of financial “HR is in a unique position to draw insights from
well-being took a serious hit in 2020. And while trusted data to help make smarter decisions.”
employee anxiety and distraction driven by the Listening is critical. Employees want to be heard,
pandemic eased over the course of the year, especially in times of crisis. Focus groups and
financial worries continued to deepen. If better employee surveys provide the opportunity to learn
supporting employees’ financial well-being is a about workforce concerns and demonstrate that
priority for your organization, optimization may leadership cares.
16Portfolio in line with
organization’s costs,
risk objectives
and markets.
Cost optimization
and effcient risk
Monitoring
Portfolio: retention and transfer.
developments and
data-driven insights Optimal alignment
of total rewards
for informed and
rapid decisions.
Analytics, Insights
and Reporting: Financing:
Data-driven HIGH-IMPACT Cost and risk
TOTAL REWARDS efficiencies
decisions
An operating model
to make, execute and
Operating model monitor strategic
to streamline decisions related to total
decisions and rewards programs
optimize internal and
external resources. Supporting employees
Admin and to make informed
Operations: Employee Experience: decisions about
Operational Employee engagement their total rewards.
efficiencies
This is particularly important, as many employees is where value optimization occurs — regardless of
have struggled with various aspects of well-being, whether you are cutting costs, keeping costs neutral
from the dual-income earners who enter daily battles or looking to enhance your programs.
over limited home-office space to employees who live However, navigating through the options and many
alone, feel isolated and have seen their emotional inputs into total rewards design can be overwhelming.
well-being shaken since COVID-19’s onset. An effective approach is to place total rewards
Assess your current employee mechanisms, and programs into five distinct dimensions that translate
then augment them to get richer data. AI-enabled broad-based strategic program ambitions into objec-
virtual focus groups are a highly efficient way to tives. (See Figure 2.) With these objectives in mind, you
gather a vast amount of information with limited are more easily able to define specific and actionable
logistics. The ROI of listening pays off in terms of tactics that result in a sustainable approach.
an appropriately allocated total rewards investment As we move to a post-pandemic world, adaptive total
coupled with a consumer-grade approach, all of rewards plans are critical to operating successfully.
which shapes a desirable employee experience. When leaders take a holistic view of total rewards and
Connecting employee experience to productivity, align their approach (and investment) to strategic
retention or growth metrics shows the value of priorities and workforce needs, organizations enhance
| November/December 2020
these change and communication investments. the employee experience and drive success. This
creates a win-win, and is essential to not just oper-
Creating Balance for ating but thriving after the crisis — and being able to
Optimal Total Rewards withstand the next watershed moment.
While the primary driver for optimizing total rewards Catherine Hartmann is the North America Rewards practice leader
may be financially based for many organizations, the at Willis Towers Watson. She can reached at catherine.hartmann@
willistowerswatson.com
approach must be about more than financial manage-
Jackie Stuedemann is a Director in the Talent practice at Willis
ment and control. Sustainability requires more than Towers Watson. She can be reached at jackie.stuedemann@willis-
smart cost and risk management. It requires thinking towerswatson.com.
Benjamin Viney is a Senior Director in the UK Rewards practice at
more broadly about the connection between total
Willis Towers Watson. He can be reached at benjamin.viney@willis-
rewards to the overall employee experience. That towerswatson.com
1718
| November/December 2020
AN
CLIMB
UNCONVENTIOONAL
Talent Mobility
| November/December 2020
When There is
No Ladder
BY ANITA BOWNESS
19Employees feel valued and want to stay at organi-
zations that help them grow professionally, but some
organizations are slow to promote or have infrequent
promotion opportunities. And even for organizations
that historically did have defined career paths with
frequent advancement opportunities, challenging
economic circumstances brought on by COVID-19 have
brought promotions and compensation increases to a
halt for many, at least for the time being.
So, without a traditional career ladder, how can
human resources and talent leaders effectively
grow, develop and retain top talent?
UP IS NOT THE ONLY WAY
Internal talent mobility — moving current
employees from role to role throughout the orga-
here do you see yourself nization, either vertically, laterally or diagonally
in five years?” It’s a — is designed to optimize workforce productivity
common interview ques- and performance, create a rewarding and fulfilling
tion we’ve all likely asked work environment, and maximize each employee’s
and been asked. And, potential and contribution. Aside from upward
it is the rare individual career opportunities, talent leaders can create a
that doesn’t answer with culture of internal mobility by giving employees
some variation of, “I see personalized growth plans that nurture their
myself working here, in a managerial or leadership unique talents and aspirations. One way this
position.” But, is that even the right question to ask? can be achieved is by creating an internal talent
Career progression is no longer only linear, and marketplace or offering short-term “gig” assign-
traditional career paths and ladders are now far less ments — project-based opportunities guided by
| November/December 2020
common than they were even a decade ago. Instead the unique skills, interests and preferences of
of emphasizing promotions, job titles and climbing each individual.
rungs of a ladder — the typical implication behind the Not only does offering employees project-based
“five-year plan” question — we need to dig deeper and opportunities that fit their skills and interests boost
think more holistically. We need to know more about engagement, retention and keep employees from
what employees want to do, rather than what they getting bored, but it can also have a tremendous
want to be. And, we need to focus on understanding, impact on business performance and innovation.
developing and finding ways to leverage employees’ Google’s “20% time” policy, for example — where
skills and personal interests so that we can better employees were encouraged to spend up to one full
engage, retain and get the best out of them — no day a week on any personal project they felt would
matter what position they’re in. most benefit the organization — famously led to
20the development of some of Google’s most inno- way to keep employees engaged while also helping
vative products, including Google Maps, Gmail and identify high potentials.
AdSense. And, who knows? Exposure to a new team Let’s say you have an employee in your engineering
or function through project-based opportunities department who expresses an interest in marketing
could also open up possibilities for new full-time operations. Through a gig assignment, you might
opportunities in roles or teams previously not on discover that their unique combination of analytical
the employee’s (or manager’s) radar. and technical skills helps amplify the success of your
But while most talent leaders can agree that organization’s marketing programs — and they may
internal talent mobility is a good idea, it’s not even find a new creative passion within your orga-
always clear how or where to start. nization. Nine-box grids — which largely look at past
performance — aren’t the only, or even the best, way
CREATING A CULTURE OF to identify high potentials. Since past performance
INTERNAL TALENT MOBILITY isn’t always an indicator of future value, offering gig
Research from Deloitte reveals that, even though 76% assignments is a great way to mine the hidden poten-
of executives think talent mobility is an important tial that exists within your organization.
priority, only 6% of survey respondents said their
organization is excellent at moving people from role
to role. And just 32% believe that their organization’s
employees have opportunities to move between oper- A talent development platform
ating divisions. So, why the disconnect?
Frankly, talent mobility is hard; it needs to be can help facilitate more effective
ingrained into the organization’s culture to work
effectively. As the same study from Deloitte goes on
performance and career
to reveal, “While organizations have spent decades
building career and promotion models to help people
management discussions.
move up the pyramid, that’s not the same thing as
having a vibrant, easy-to-navigate internal mobility
market and culture across the entire organization.” 2. FACILITATE ONGOING
Here are five tips for creating a culture of internal COACHING AND MENTORING.
mobility that keeps your people motivated, By cultivating a culture of continuous coaching and
engaged and growing. real-time feedback, you can deliver a performance
| November/December 2020
management experience that motivates your people
1. TAKE A CUE FROM THE GIG ECONOMY. and improves performance, while also delivering
Today, more than 55 million people in the U.S. on your business goals. With effective, consistent
are a part of the gig economy. The nature of the coaching and mentorship, your people can develop
workforce is changing, and employees — especially the knowledge, skills and confidence they need
Millennials and Gen Zers — highly value variety to step into the next chapter of their careers.
in their work. Offering temporary, project-based Technology can be a great enabler of this shift from
opportunities for employees to explore their inter- “managing performance” to coaching for growth.
ests and apply the full range of their skills — by A talent development platform can help facilitate
matching individuals to project work, creating an more effective performance and career manage-
internal talent marketplace, of sorts — is a great ment discussions. With 1:1 meeting and check-in
21tools, for example, employees and managers have that set your people up for success. Tying develop-
a centralized way to track and collaborate on goals, ment activities to those critical competencies or
exchange meaningful feedback, share progress “soft skills” that link to your business priorities or
and insights from special project assignments, and organizational values should also be part of your
identify and discuss career development opportu- skills development mix. And supporting hackathons,
nities. Creating mentorship programs and employee side projects and gig assignments — especially
resource groups (ERGs) to connect employees from the top down — is invaluable in encour-
outside of their immediate work and leadership aging and reinforcing a growth mindset across
teams — or even using a talent management system the organization.
to automatically connect mentors with mentees
across your organization — is another valuable way 4. BUILD FLEXIBLE, PERSONALIZED
to empower and develop your people. CAREER PATHS
Recent Brandon Hall Group career development
3. EMBRACE A GROWTH MINDSET. research reveals that only about one in five
Claude Werder, an analyst from Brandon Hall Group employees has a clear and well-communicated
notes, “Most leaders will tell you they want to career path, and less than one-third of organiza-
promote more employees from within. But almost tions provide personalized development plans for
60% of organizations from our research say their the majority of their employees.
But to successfully navigate the constantly
changing business landscape, your people need
Through collaborative goal setting, flexible, agile career paths that enable them to
move in any number of directions.
managers can help employees After all, 85% of the jobs that will be available in
2030 haven’t even been invented yet. To keep pace
align their goals and interests to with this change and readily adapt to the demands
of the future, career paths need to be fluid and
career development opportunities organizations should help their people adopt an
agile career development mindset. Through collab-
that support key business objectives. orative goal setting, managers can help employees
align their goals and interests to career devel-
opment opportunities that support key business
| November/December 2020
internal talent pipeline is not large or deep enough. objectives — and adjust them as often as needed.
That reflects a lack of talent development.”
Since a different mix of skills, competencies and 5. LINK LEARNING AND DEVELOPMENT TO
experience is generally required to successfully CAREER GOALS.
shift from one role to another, talent leaders need Personalized career paths are vital to employee
to equip employees to take on new roles by helping growth, but unless employees also have the
facilitate a continuous learning and development resources, guidance and direction they need
culture. By creating a flexible, personalized learning to progress along those paths, they aren’t very
experience — one that supports both formal and actionable. Once employees have mapped out
informal learning activities — you can deliver mean- their individual performance and career goals, it’s
ingful skill and personal development opportunities important for employees to be able to identify
22You can also read
