Faith, Trust, and Pixie Dust at Total Rewards

May 11, 2017 Sarah Payne


Is it possible to boil down everything we know about building culture into a few key ingredients?

Possibly. One of my favorite quotes from WorldatWork’s Total Rewards conference this week in Washington, D.C., came from Colleen Burgess, director of compensation and performance at Qlik. Speaking on a panel with three other Globoforce customers titled, “Slicing Up the Total Rewards Pie to Deliver Stronger ROI,” Burgess told the audience that the key to building a great culture comes down to, “Faith, trust, and a little bit of pixie dust.”

Building Faith & Trust

Establishing a sense of trust at work through fairness and transparency was an idea carried throughout the three-day conference. And is there any other topic more relevant to fairness than pay equity?

Melissa Murdock, senior manager, external affairs at WorldatWork, outlined several hot-button public policy issues about pay that are being debated in the United States. For example, WorldatWork supports the End Pay Discrimination Through Information Act, which clarifies that it’s unlawful for an employer to retaliate against an employee who voluntarily discusses compensation.

On the other hand, WorldatWork is opposed to the Pay Equity for All Act of 2017, which would prohibit employers from asking job applicants for their salary history before making a job or salary offer. I’m curious how our readers feel about this issue. Do you support this legislation or oppose it? What if you put yourself in the shoes of a job applicant?

Another fascinating session on the topic of pay equity was presented by Christopher Ryan and Ahu Yildirmaz from ADP’s research team. The research was based on a study of 11,000 employees of similar age groups who started jobs in Q3 2010 and stayed with the same companies through Q4 2016. Key findings were:

  • 28% pay variance between men and women
  • Women start with average salaries that are 82% of men’s salaries
  • On average, women’s bonuses are 56% that of men’s bonuses

What’s especially alarming about this research is it shows bonus pay can become a huge liability and risk for businesses. Even if men and women have about equal salaries, there is often a great deal of discretion on the part of managers when it comes to incentive and bonus pay. ADP recommends better discipline around bonuses to prevent inequity (and potential lawsuits). You may also consider allotting more of your bonus dollars toward crowdsourced recognition – tapping into the power of peers to offset manager bias (whether intended or not).

…Pixie Dust?

What about that third ingredient in the culture mix – pixie dust? Is great culture something that magically appears out of thin air?

I would argue the magic comes from how we approach total rewards as a discipline. In Monday’s opening keynote, author and CEO Peter Sheahan told us that, “Big ideas always start by questioning the things we think we know.”

So what happens when we start questioning the traditional ways of divvying up the total rewards pie? Steve Menzel, director of compensation at Bristol-Myers Squibb, discussed the total rewards transformation his company went through. A thorough internal analysis revealed that social recognition was eight times more effective in improving employee engagement than an annual 5% increase in base pay. Bottom line? Throwing money at a people issue is not always the answer.

Another great example in the realm of questioning the things we think we know came from a session with Elise Eberwein, executive vice president of people and communications at American Airlines. The session focused on the total rewards implications of the merger between US Airways and American Airlines in 2013.

The airline industry is unique in that it is highly unionized, with very low attrition and a “hire for life” mentality. Each year about 200 American Airlines employees celebrate 40 years of service with the company.

After the merger, American Airlines has been focused on retaining subject matter experts and bridging the disconnect with front-line workers. The leadership of chairman and CEO Doug Parker in particular has been far from traditional. Until all front-line employees were paid comparable salaries to Delta Airlines and United Airlines, Parker insisted that his compensation be lower as well. Even now that the salaries have evened out, Parker’s compensation is still 15% below industry average.

Parker’s focus is taking care of employees and their families. Another bold and unprecedented move by American Airlines was implementing out-of-contract pay increases for pilots and flight attendants.

“Command and control doesn’t play well after a merger,” said Eberwein. “We need to be more thoughtful in our leadership.”

Do you agree? What do you think is the pixie dust that sets your culture apart from the rest? How are you working to build faith and trust in your workforce? Let us know in the comments!

Faith, Trust, and Pixie Dust at #totalrewads17
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