Possible Pitfalls, Global Rewards, Evaluation, and Metrics

Module 5: Possible Pitfalls, Global Rewards, Evaluation, and Metrics


Topic 1: Possible Pitfalls of Implementing, Communicating, and Measuring Total Rewards Topic 2: Cultural, Legal, and Country-specific Practices Topic 3: Metrics and Evaluation Topic 4: Conclusions

Topic 1: Possible Pitfalls of Implementing, Communicating, and Measuring Total Rewards

As with any major initiative with many steps, various people and departments involved, and tasks that are designed and implemented over a long period of time, there are pitfalls that are possible. Some of the more common ones are presented in this section in order to bring awareness to them.

1. Jumping in without the required research: Organizations are action-oriented and tend to want to begin solutions before having done adequate research. However, without the proper supporting data, wrong decisions can be made. It is important to take the necessary time and have the money to gather the required data on which to base the important decisions.

2. Not having support in the organization: Not only time, but also funding, will be required for the staffing needed for the implementation of total rewards and for the rewards themselves. Without the key leadership’s support within the organization, the proper communication will likely not occur and the rewards will risk being revised or even eliminated. The support of the organization needs to be confirmed at the beginning, during the entire design and implementation process, as well as ongoing as the rewards are being evaluated.

3. Not analyzing the costs: The cost of rewards for work performed is one of the largest segments of an organization’s budget. Without properly analyzing the costs of the rewards, separately and combined, decisions made about them cannot be effective. The analysis of the costs will include not only the expense in today’s dollars, but also the cost in the future.

4. Attempting to do too much too quickly: If too much is attempted at once, the process can suffer. Each step is important and must be done properly because the success of the implementation depends on the foundation of data gathered. The care taken in communicating, obtaining buy-in, and concurrence can be determining factors toward the success of the programs. Take the time needed for each step of the process, including the essential steps of measurement and evaluation.

5. Not establishing objectives and metrics that are linked to business objectives: The core of the total rewards model is that the rewards offered are aligned to the business objectives. Unless program objectives and metrics are aligned to the business objectives of the organization, success cannot be evaluated.

6. Having to take rewards away: If rewards are introduced and then taken away, it’s worse than never having had them at all. Employees quickly develop a sense of entitlement to rewards. Taking rewards away creates a sense that the organization is not supporting them, is punishing them, or is not appreciating them. Take great care that any reward implemented can be sustained. But if something has to be taken away, also take great care in communicating why the decision was made to do so.

7. Unexpected change in requisite KSAs and/or business plan: Due to changes in the domestic or global economy, changes in the competition, expansion, mergers, or the introduction of expanded products or services, changes for the organization may occur that could result in the organization requiring a different set of KSAs in order to be successful. If this happens, the organization will need to assess if the current reward programs will still attract, retain, and motivate the needed employees.

8. Communication issues such as errors in the messages or not understanding the audience: The rewards programs are only as good as they are communicated and administered. If the communication has errors, is not targeted to the audiences inside and outside the organization, and not customized for those various audiences, the programs may not have credibility and may not be seen as positive. Cultural differences of countries must also be considered. One organization launched an expensive marketing program for a new product only to learn that the colors it used in its advertisements were viewed as vulgar in the country it was targeting. This can happen with the marketing of reward programs too. Too many words and too much clutter are not effective; keep it simple, especially on web sites.

9. Measuring the wrong things: Measuring the wrong things is worse than not measuring at all, because key decision makers may make a correlation between the results the wrong metrics are representing and the rewards programs. For example, if the level of satisfaction with rewards alone is reported rather than engagement of the employee, commitment to the organization, or level of satisfaction with various segments of the rewards programs, the level of satisfaction increasing or decreasing overall may encourage changes to the programs when they are actually effective.

10. Not measuring: Without a measurement, the effectiveness of the programs cannot be determined. Not only are the programs to be measured, but key metrics that gauge the relationship between the programs and the organizational goals are essential. When measurements are taken and reported, it highlights that the program and the objective it relates to are important. Without measurement, the necessary revisions cannot be determined. Without measurements, money may be wasted on ineffective programs.

11. Using available data (not relevant): Using information that is already available may be easy, but the data may not be relevant to the reward programs. The available data may be measuring efforts, tasks, or results that are unrelated to the success of the organization. For example, overall turnover of an organization may be measured, but without knowing if turnover has increased or decreased in certain positions that the rewards are attempting to affect, the data is not helpful. The turnover may, in fact, be a positive outcome.

12. Measuring everything: When an organization does not really know what to measure, it is likely to try to measure everything. This dilutes the communication of the right measures, leads to decisions being based on irrelevant data, and wastes the time of those collecting and reading the data.

Pitfalls Specific to Web Sites

Increasingly, organizations use a web site designed specifically for the communication of their rewards. In addition to general rewards communication, many organizations make their total rewards statements available online and update the site frequently for employees. Because the web sites are such a frequently used method of communication, following are a few suggestions to address any possible pitfalls specifically related to web sites:

1. Review the web site every time you update data: And conduct a complete review at least once annually. Messages can become outdated quickly, and information that is irrelevant or incorrect hurts communication.

2. Don’t be afraid to include as much information as you want: The goal is to be inclusive of all the rewards while also keeping the site uncluttered and not overly crowded. This can be achieved through proper design of the site, with links to additional information.

3. Don’t forget to obtain employee input and feedback: Do not assume that what is thought of by the authors or designers of the web site as being effective is necessarily so for employees. Ask for feedback about the content, layout, ease of operation, and style of communication.

4. Don’t think you are done at implementation: Just because a web site has been launched does not necessarily mean it is complete. Daily and continuous monitoring must be done, as well as the various revisions that will need to be made to the programs.

The possible pitfalls and suggestions discussed in this segment are just a few examples of what organizations have found to be areas to plan against and the areas to plan toward. With the proper attention to the details mentioned, and proper execution and monitoring, most of the pitfalls can be avoided and the suggestions incorporated.

Topic 2: Cultural, Legal, and Country-specific Practices

Most organizations cannot view their reward programs solely through the lens of the United States. Many organizations are global in nature or have at least some presence in other countries. They therefore need to offer rewards that are meaningful and valued across cultures. According to WorldatWork (2007, p. 38) the following should be kept in mind when developing cross-cultural rewards:

1. Be sensitive to cultural issues: Consider rewards in the context of the employee’s social, cultural, and geographic background. What motivates individuals in one country may not motivate in another. The communication style or means in one country may not be as effective in another. Compensation of teams versus individual incentives differs, and the way recognition is given to employees will vary from one country to another.

2. Know the laws: Each country has its own specific set of regulations, policies, and customs that must be adhered to.

3. Balance external competitiveness (based on market standards for geographic locale, such as the same region or country) with internal equity, such as equal rewards for equal work regardless of geography.

4. Don’t be too different: The total rewards should have broad commonality around the company’s global strategy and values. Some of the areas that can be consistent, no matter the county, are competitiveness, employee understanding and appreciation, and providing good services or products to the customers (WorldatWork, 2007, p. 38).

Examples of Country Differences

To exemplify how different the rewards can be while also still holding true to the commonality of the rewards philosophy, a few differences among countries are shared. For example, in the Middle East benefits are primarily cash-based in the form of allowances to cover costs such as housing, schooling, and cars. In Germany and France, a number of perks are still under state control. Eastern European countries, such as Poland, are starting to become more sophisticated in what they offer, and additional perks are being added. Cars are now starting to be offered in some geographic areas, while basic health care benefits are also valued by staff (Employee Benefits London, 2007, p. 40).

The following are a few more examples of rewards of various countries. This information is summarized from a Mercer study entitled Engaging employees to drive global business success: Insights from Mercer’s What’s Working Research (Mercer, 2007, p. 14).

Canada: what they want is (mostly) what they get. Three factors are truly important to Canadian workers: being treated with respect, having a good balance between work and personal life, and feeling that they can give good service to their organization’s customers. In general, there is a good match between what Canadian employees consider important and how they feel their employers meet those criteria. About 75 percent report that they are treated with respect and that their organization has a good reputation for customer service. Almost two-thirds say that they are able to maintain a healthy balance between their work and personal lives (Mercer, 2007).

Local perk: medical services and prescriptions provided at low or no cost.

France: c’est la vie indeed. French workers prize work/life balance more than their peers in other countries, confirming continuing tensions surrounding the struggle to extend France’s 35-hour workweek. Yet they also place a premium on providing good service to customers. However, employers need to pay more attention to issues of respect, which is a most important engagement factor for French workers. Less than half report that they are treated with dignity and respect, and fewer than four in 10 report that they are encouraged to innovate (Mercer, 2007).

Local perk: an average of 40 days off, and some French employers offer the use of company-owned ski chalets and beach houses to employees for a nominal fee (McGregor, 2008).

United States: respect goes a long way. American workers look for respect and place a premium on career advancement. For those who think they are treated with dignity, more than four- fifths are willing to go beyond the call of duty to help their organization succeed. Having confidence that career objectives can be met is a key determinant of engagement for workers in the United States. Nearly nine out of 10 employees are willing to go the extra mile when they see career growth opportunities in their midst (Mercer, 2007).

Local perk: chief executive officers (CEOs) commonly receive financial planning benefits, and group and prepaid legal services (McGregor, 2008).

China: more training, please. For Chinese employees, benefits rate highly as a driver of engagement. However, this is an area in which many employees are dissatisfied, which is a reflection, perhaps, of the lack of a developed social security infrastructure in the “new” market-oriented China. But few believe that they get enough opportunities for training and development. Nearly one in four reports that his or her organization does not provide good training opportunities to enhance career options. And only about half of all employees in China report that their managers actively encourage them to participate in training opportunities (Mercer, 2007).

Local perk: companies operating in China are required by the government to chip into a housing fund that’s available to their Chinese employees, who also make contributions. When employees are ready to buy a home, they can draw from the funds to help with financing (McGregor, 2008).

Japan: nice incentive pay, but what about the base? Base pay and incentive compensation (a form of the variable pay mentioned in module 2) are very important to Japanese employees relative to other factors in Japan and when compared to what is rated highly by employees elsewhere. Relatively speaking, the Japanese are dissatisfied with their base pay, but they feel motivated by their incentive compensation plans. Organizations’ base pay issues have to be addressed, but not at the expense of the incentive compensation pool (Mercer, 2007).

Local perk: family allowances on top of their pay, depending on the size of their family (McGregor, 2008).

India: engaged, for now. In India, employees cite the type of work and their promotion opportunities as the foremost motivators, and, for the most part, employers are meeting their needs. Workers send favorable signals of commitment: four-fifths say they would recommend their organizations as “a good place to work.” But given the opportunities opening up in such a dynamic economy, Indian managers need to stay on top of what workers value, including helping workers understand the rewards package and programs being offered (Mercer, 2007).

Local perk: health care for aging parents (McGregor, 2008).

These examples exemplify the variety of rewards offered, by country, to attract, retain, and motivate employees. Most of the differences are cultural in nature, but differences can also be due to governmental regulations. Just as in the United States, the segmentation of workers is required in each location; what is offered to some segments of the population will attract and retain while for others a different set of rewards may be needed.