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Why Do Employers Need a Total Rewards Strategy?

This is the first of a 4-part series on Total Rewards Strategy. Follow this site if you want to make sure you receive all the remaining installments.

Why does an organization need a total rewards strategy? What is it and how do you develop a strategy? What are its components? How is it applied?

This blog series attempts to set out the core elements of total rewards strategy. I will break the subject down addressing various elements in a logical sequence:

  1. Why do employers need a total rewards strategy?
  2. What’s in a total rewards strategy?
  3. How do you develop a total rewards strategy?
  4. How do you implement a total rewards strategy?

Why do employers need a total rewards strategy?

Consider these scenarios:

  • A large mature manufacturing company is failing, losing market share fast, watching their prices fall and customers walk away as disrupters enter with alternative products and services. Yet fixed costs–mainly salaries–are still rising as the company has traditionally rewarded “loyalty” keeping people whole with inflation and paying bonuses in both good years and bad. Margins are dropping fast.
  • A startup company has grown to 250 employees, adding staff almost daily, and feels they can no longer negotiate each pay package from a blank sheet of paper. People are talking and there is a buzz about inconsistency. There are rumors about discrimination on the basis of gender, religion and politics.
  • A growing company with 2,000 employees has adopted “industry best practices” and finding that their culture has lost its spark, people do what’s in their job description and little more. The company pays “market median” through benchmarking and HR follows the “correct” methods in everything it does, so as not to be questioned. Sales, margins and other indicators are merely acceptable. Despite acceptable staff turnover, CEO does not feel the company is attracting or retaining the best talent.

What do these scenarios have in common?

Their reward practices do not align to business needs. Pay practices are inefficient, ineffective or killing margins. The pain and risk caused by these results are enormous:

  • In the first case, the large mature company has followed paternalistic pay practices within a competitive industry. (This is more common than you might think.) As a result, layoffs are almost certain. There is little money available for R&D. The company is headed for decline. The “good people” are leaving to join the new disruptors. Those who stay claim loyalty, when in fact no one out there can match their current pay and most of the “loyal” employees have not invested in their own development. Many feel they are no longer marketable and most are correct. In fact, the company has assumed their customers were loyal. Until they weren’t. They assumed their distributors were loyal, but the end customers now buy online, not in stores. Disruption is leading to extinction for this company.
  • In the second case, the startup has no system. A manager in software engineering has hired a guy he used to manage at a previous company, at a salary 40% higher than the average salaries offered to females in the same year. Not only are people concluding there is gender pay discrimination, but they talking about favoritism. Lack of any sort of pay structures, policies, philosophy or process is resulting in a patchwork of pay decisions explainable only as favoritism and bias. As a result, HR is swamped with emails and meetings about pay issues, salary proposals, justifications, accusations and so on. They are so busy driving a broken car they have no time to fix it.
  • In the third case, the growing company decided a few years ago they needed a pay system to ensure fairness and consistency. Tired of negotiation, they had progressed beyond startup stage to growth stage where processes and systems are put in place. That year, HR was given a KPI to “implement a compensation system including grading and salary ranges by end of the year.” HR embarked on a benchmarking study to determine industry best practice, and attended a course to learn the “correct” way to develop salary ranges (like using +/- 20% range width..) The completed their KPI, addressed all the outliers, froze people over the max, calculated compa-ratios, linked annual raises to performance ratings, and implemented a salary proposal worksheet to set starting salary offers more fairly and consistently. Managers received an email with all the pay policies they had to obey. Pay decisions are now made much faster, with little room for bias. The problem now is that managers feel their hands are tied when they need to make a mid-year off-cycle pay adjustment to retain their top innovators who are making an exodus to their competitor. In fact, the forced ratings curve has resulted in a key player on a strong team getting a low rating (someone has to get a low rating..) and has just tendered her resignation. What’s left are the mediocre talent. And no surprise.. business results are mediocre.

If these three organizations had deliberate, written reward strategies, they would be able to develop their pay practices accordingly, rather than leaving pay decisions to well-meaning managers who fall back on their own instincts from previous experiences, or just keep the status quo. With a written rewards strategy, HR would have a blueprint against which to evaluate current practices and to guide new ones. With a written reward strategy, the organization could target certain talent and effectively get and keep the best, while deliberately enabling low contributors to leave voluntarily by NOT putting golden handcuffs on them through guaranteed minimum raises.


  • We have marketing strategies because you just can’t make and sell everything to every type of customer through every channel. You have to make choices. We will do this; therefore we will NOT do that.
  • We have finance strategies because you just can’t spend whatever you want and borrow money to do it. You have to make choices. We will spend money on this, not on that. Like value investing, money goes where better returns are expected.

Employers need reward strategies to guide overall rewards program design and to guide specific reward decisions, to achieve business objectives and support the talent strategy. You have limited dollars, so you have to make choices. Some types of workers get more and some get less. Within a group, some individuals get more, some get less. There are more than 100 types of specific pay and benefit practices and no organization offers them all; you much select those practices that will have strong appeal to those having the talent you need.

“Now hold it! Marketing and Finance are more important than HR in this company. We are viewed as an administrative function.” For many of you, that’s a fair point. Let me ask you, why is HR viewed as an administrative function? Is it because HR is not allowed to be strategic? Or is it because HR has not brought any strategic ideas to the table? Just asking. Break the mold, shatter the stereotype of the HR profession. Have a talent strategy, and to enable it, have a rewards strategy.

There is a strong case to be made for controlling cost, maximizing efficiency and effectiveness, aligning rewards to business needs, supporting high performance and so on. If others aren’t being strategic about rewards, and you are, you have a chance to outdo them and win the talent you need more successfully than they do.

What Motivates Freelancers? The Freelancing Value Proposition

What motivates freelancers to freelance? This is a question I can relate to personally, since I joined the gig economy in 2013. As a lifelong student of management, I have challenged myself to understand my own motivation, both out of curiosity and to find a way to respond when my wife tells me to get a job.
Clearly this is about the “total” package for a gig worker/freelancer. Yes, the money can be good (or bad), but the full deal for freelancers includes, well… freedom. This can be compelling, and now we’re talking about motivation, so let’s revisit the major motivational theories applied to work.

Herzberg and Maslow Refresher

Frederick Herzberg developed the two factor theory (Motivator-Hygiene Theory) of motivation which holds that pay and benefits do not motivate, but rather we are motivated by achievement, recognition and challenging work, I.e. the work itself. Pay and benefits, according to Herzberg, are hygiene factors, or “de-motivators” which do not motivate when increased, but rather demotivate workers when they are reduced or not sufficient in some way.
I have taught this theory, along with Abraham Maslow’s hierarchy of needs, Adams equity theory and Victor Vroom’s expectancy theory to well more than 1,000 Human Resources practitioners as well as about 700 line managers (the ones who actually manage people.) It could be everyone is being nice, but no one disagrees with these widely-accepted theories. I certainly find that after 33 years of doing work in the total rewards field, they prove true time and time again, when observing how people respond to changes in their various rewards and the work they do to earn their rewards.
Maslow’s Hierarchy of Needs (originally a developmental theory) states that a person is motivated by their lowest unmet need. Physiological needs are the first and most basic needs, which must be satisfied before safety and security (level 2) will motivate a person. Consider, an animal will venture out of its hole to find food, demonstrating in nature that physiological needs (food) motivate the decision to let go of safety. Once an animal finds food, it will certainly return to its hole to consume the food, because the physiological need has been met, so safety and security now motivate the animal. We do this when seeking income. A worker will work for cash—no employment contract or benefits—if necessary to feed himself and his family. But once employed for cash, he continues to search for employment where there is a contract providing job security, benefits and labor law protections.
Maslow’s and Herzberg’s theories are fully consistent. Pay allows us to survive: food, clothing and shelter (and se… cure wi-fi) all cost money. Benefits are a form of safety and security, since without them, we must save a large portion of our pay just in case we get ill or injured or retire or need time off of work. Benefits are a form of income protection. According to Maslow’s theory, pay and benefits must be sufficient before higher order needs will motivate.
Herzberg’s two-factor theory would support this, since according to his theory, motivators such as recognition (addressing Maslow’s need for esteem) or achievement/challenge (related to self-actualization) will not motivate in the presence of demotivators such as insufficient pay or benefits. According to Herzberg, fix the hygiene factors first, then motivate using intangible rewards such as job enrichment.

Enter the Gig Economy

So far so good. Except for one thing that has bothered me the last few years. The “gig economy” is now a legit thing. Massive numbers of people are working on fixed-term contracts without social security contributions, benefits, corporate bonuses, corporate recognition, company outings and company-provided training. If Maslow and Herzberg are correct, it would be logical to conclude contingent workers are mainly motivated by money (meeting physiological needs) as they are missing out on so many corporate rewards aimed at higher needs. Why are people like me* willing to forego all these rewards? For many it is because, like the animal, we must eat. But for the rest of us, I have a theory..
Freedom Opens a Door to Meeting Higher Order Needs
I believe that the freedom and flexibility enjoyed by freelancers is the reason why we are willing to forego all the higher order rewards offered by the best places to work. While there is no substitute for working for an employer of choice, there is the option to not be employed by choice. Therefore a freelancer will succeed only if he or she is willing to forego the safety and security of a fixed paycheck and benefits, for the sake of much greater chances of being satisfied by doing what they want to do, achieving better work-life balance, as well as esteem, growth, and even career opportunity. In short, we are willing to venture out of the cave (safety and security) in return for nearly total work-life flexibility which enable us to satisfy our higher order needs for:
  • Affiliation (time with family, friends);
  • Esteem—working at home and being near the people you love most; not being thrown under the bus and working with insecure people ready to stab you in the back; the possibility that you gain some respect if you can establish a reputation as an expert in your field; proving you can do it
  • Self-actualization – achieving work-life balance may in fact be your highest ambition; being your own boss, running a business, being a CEO
While there is no substitute for working for an employer of choice, there is the option to not be employed by choice
When Herzberg published his theories in his book, The Motivation to Work, in 1959, there was no gig economy apart from a few trade or service occupations. Fast forward to the current time where the gig economy includes full-time intentional and branded freelancers and we must re-examine why it is people are willing to forego benefits—a critical hygiene factor—in return for higher order needs. In my simple view, it is because work-life balance is the door opener to all the higher order rewards. In our “job” mindset, these mean corporate intangible rewards such as company-policies for flexible work arrangements, company recognition practices with nomination committees, company training and so-on. But when you take away the “corporate” assumption, the freelancer gets all these, and gets them without limits or corporate policies:
  • Freelancers don’t need permission to work at home, work flexible hours or take an extended leave
  • Freelancers can serve at the local soup kitchen or volunteer agency when they wish
  • Freelancers don’t need someone to nominate us for recognition—the love of family or friends may be all we seek
  • Freelancers don’t need managers’ permission and a corporate training budget and an individual development plan in order to attend training, or to use work time to read a good book or attend a professional event. We just do it, although we miss having a corporate budget!
Freedom to do the work you want to do is consistent with Herzberg’s prescription of job enrichment to increase motivation. In lieu of a job description, the freelancer can pick their scope of products and services. This is a powerful motivator. As a personal example, I was with a large HR consulting firm where I was in charge of the global mobility practice for the Asia Pacific region. I was good at it, and my billable consulting exceeded all other consultants in a group of more than 200 people. But I was an even better consultant in the area of broad based rewards (compensation) and total rewards (holistic rewards) consulting. But since my job was only global mobility, I eventually was made redundant (laid off) since there was another senior person in the practice, and due to a corporate cost-cutting driven from headquarters far away. Looking back at the last 6 years, roughly 95% of what I have been doing as a freelancer would not have been permitted at my former firm, since I was in a specific role, global mobility. Others were doing pay system development, job evaluation, benchmarking, incentive design, salary reveiw support, training, etc.

The Freelancing Value Proposition

The above rewards—flexibility when and where to work, what work to do, volunteering, time with loved ones, freedom to read, attend a learning opportunity or write a blog when inspired—can be compelling, provided hygiene needs are met. This is the Freelancing Value Proposition – do this and get that. What we must do is take initiative to create and define our products or services, market ourselves, close sales, perform work, collaborate with clients and associates, send invoices and collect. Repeat. It’s not for everyone, for sure. But for those who can brand themselves and win gigs, it’s a good deal.
In light of the Freelancing Value Proposition outlined above, the people who may be most motivated to be a freelancer are those who:
  1. Can meet their physiological and safety/security needs without having a corporate job, I.e. they can earn enough from freelancing and can secure medical insurance independently, through a spouse or via self-insurance (rainy day fund); and
  2. Are highly motivated by work-life balance for its own sake; and
  3. Are willing to exchange corporate affiliation, corporate activities, corporate recognition, corporate training, etc. for other sources of recognition, affiliation, growth or achievement, which are made available through much greater work-life flexibility
In my own case, I have found I can meet my needs for affiliation through teaching and meeting with clients, former clients, students, former corporate colleagues, etc. I have coffee meetups 2 or 3 times a week, in addition to client and associate consultant interactions. As for recognition, it’s admiring the person in the mirror until you happen to win awards or get invited to speak at conferences. My reputation in the field of total rewards gave me confidence I could continue to receive a bit of sunshine once in a while, in the form of website or LinkedIn followers, likes, etc. As for growth, I have invested in myself in ways an employer would probably not approve:
  • ACTA certified in 2013/2014
  • Certificate in Business Mandarin Fundamentals this year
  • Conducted research to understand global mobility and performance management trends in Asia
  • Presented on Contractualization at the Employers Conference of the Philippines in 2017
  • Read books by Daniel Kahneman and David Rock
  • I learned how to create Learning Circles in 2017
Herzberg and Maslow were correct, in my view. When applied to today’s gig economy, we need to recognize not everyone wants corporate employment. Employers in need of contingent workers must establish a freelancing value proposition consisting of money, in lieu of other rewards, knowing there are people out there in the gig economy who are happy to take the gig. Smart employers may even wish to find a way to provide higher-order rewards such as involvement in company activities, but should keep in mind the person may have other ways to satisfy their higher order needs without their corporate programs.
My advice to freelancers: don’t just work and get the money. Buy insurance, spend time with friends, family and colleagues, get recognition and continue learning.
Your thoughts?
*my firm, Freelance Total Rewards is a gig economy alternative to the big product-focused consulting firms

Pay Structures—Simple?

Both art and science are involved in creating a salary range structure. I cannot fit it all into a blog. Perhaps I will write a book someday. I’ve created several hundred pay range structures to guide pay decisions. No two are the same.

For those of you who think it is a simple thing, here are some of the key questions and considerations. The answers to these questions will lead you to smart decisions on how to construct the pay ranges.

  1. Number of structures—should different business areas have separate structures, or use a single structure? Consider separate structures for sales, senior management, white collar versus blue collar, hourly versus salaried, union versus non-union, or strategic versus non-strategic (enabling or transactional) functions. Are there market pay differences by function, at the same grade level?
  2. Number of grades—how many reporting levels are there? How flat does the organisation want to be? How frequent should promotion opportunities be? How much resourcing does the HR dept have to conduct job evaluations (more grade levels require more job evaluations)?
  3. Make or buy?—does the organisation prefer to hire fresh graduates and develop them over time, saving on salary, but allowing greater control over the development of work attitudes, alignment to company culture and values, and industry knowledge? Or does the company prefer to hire people with more experience, people who can “hit the ground running” and already know the industry, but who come with expectations, current pay packages or work habits that create challenges? The answer to these questions can influence decisions about “anchoring” the range minima and midpoints of certain grades to the corresponding market pay levels that will make the chosen approach effective. A buy approach may require wider or less rigid ranges.
  4. Internal versus external focus—should grading be strictly determined by job evaluation, looking at job content, or will market value influence grading to ensure ranges are competitive?
  5. Job evaluation methodology—Does your job evaluation method result in a number of job levels that aligns naturally to the levels of your structure? If your structure gives you level scores ranging from 40 to 60, will you build a structure with 21 levels to match, or do you need only 12 or 13 levels? The market may recognize 3 levels of IT help desk, and your job evaluation system can distinguish them well, yet if your structure has 8 levels, then you only need two of them for IT help desk. How will you therefore withhold a promotional opportunity offered by other companies to conform to a flat structure?
  6. Pay philosophy on market positioning—will there be a lot of allowances, which take pressure off of salary? Will incentive opportunities be at, below or above market norms? Does the company wish to align to the market, or lead the market with higher pay levels for certain business areas or job levels or locations? Do you want to lead on salary and lag on incentives? What is the ideal mix of compensation? How competitive are benefits or other rewards? To what extent can intangible rewards form part of the package, such as contributing to nation-building or opportunity for international projects?
  7. Philosophy on development—are frequent promotions desired, and if so, should promotions be based on the job only? Can people grow “in the job” or must there be growth “of the job” for a promotion?
  8. What is the role of job titles? Will titles be hard-wired to grade levels, or have a life of their own? If there are fewer, broader grades, will it be possible to use such title prefixes as Junior, Senior, Assistant, Deputy, 2nd Assistant, etc.? Must all “managers” be in the same grade? Should administrative support roles like PA be consistent, link to the level of manager supported, or be graded strictly based on job evaluation factors?
  9. Selection of pay statistics—survey data can be acquired easily. It can be bought with participation or a promise to participate. The challenge is knowing what numbers you want to use from the survey:
    • Regressed data can be used directly if you wish to have a similar number of grades compared to the levels provided in the regressed data (e.g. Mercer position class, or Radford career level, etc.) If the company’s desired number of levels matches the levels of your data source and a one-size-fits-all structure is desired for overall internal pay equity, an organisation can align their grades directly to the survey levels and simply use regressed data as midpoints!
    • Job specific data is the preferred approach for larger organisations with a diverse range of job families. Job market values within the same grade may vary significantly, so it is important you can find job-specific data. If you are competing with an industry dominated by 1 or 2 employers whose pay packages you do not intend to match, then use company-weighted data if available.
  10. Personal market value what is a person worth? Two programmers, one using SQL and another using JavaScript or GoLean will have drastically different market values, even with identical job descriptions.

The answers to these questions and the combination of answers will point to a specific solution. From there you construct the ranges and model them for fit against the population Avoid creating a monster or a class system. Keep it simple and fair, yet effective at guiding individual pay decisions in a way that effectively attracts and retains talent, allows sufficient differentiation based on performance, give you access to the range of market talent you want.

Plus.. your ranges should look nice when shown as a graph. That was a joke.

There is no way to fully automate creation of a fit-for-purpose salary range structure, though I supposed it is possible to come close. I know of no company that does not use Excel, building ranges like a craft. There’s no app or bot that can do this to my knowledge.

Also read Top 7 Risks When Building a Grade Structure

Mainstream in Manila: Total Rewards

The region’s top HR and rewards (Comp & benefits) leaders are converging in Manila July 26/27 for the ASEAN Total Rewards Institute’s Total Rewards Congress. This marks the emergence of total rewards as a mainstream business priority in the Philippines. Why is this? A total rewards approach is the key to attracting and retaining talent in a competitive market for talent, especially in a growing economy in a growing region with a very challenging business environment.

Imagine managing HR in the Philippines, the world’s second largest exporter of talent (behind India), a country where:

  • employment regulations, job protections and mandatory benefits are so burdensome, 41% of workers have no employment contract at all, and those with contracts are often terminated before gaining permanent status at 6 months;
  • where employers are mostly paternalistic and “love” their workers like family, yet unions can be hostile, even violent;
  • where traffic congestion is awful and getting worse, yet employers resist supporting work at home arrangements due to traditional management mindsets…

But to the HR and C&B managers in the Philippines, this is normal. In fact, throughout most of ASEAN, these challenges are familiar.

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So how can a total rewards approach make a difference?

Three ways:

  1. First, total rewards looks at compensation & benefits differently, not as a “minimum cost, maximum copy” system where you simply follow industry norms and avoid paying people more than necessary.  Total rewards experts view cash compensation and benefits from a strategic point of view, selecting specific approaches for these areas to maximize value for money, rather than simply reduce cost. For example, many organizations provide very competitive pay, but it is more generous on the performance bonus which is “self-funding” based on financial business results. Many organizations support preventive healthcare and wellness to reduce demand for healthcare, not focusing simply on insurance costs which only address healthcare supply.
  2. Second, total rewards includes both tangible (compensation and benefits) and intangible rewards, such as work-life/flexible work arrangements, recognition, development and career opportunity, as well as leadership/management. Any employer can compete on salary to hire someone, but retaining good talent requires more, including a fair and consistent approach to promotion, opportunity to learn new things and occasional recognition.
  3. Third, a total rewards approach is dynamic, addressing changing needs and preferences of workers, who represent millennials, long-service staff, singles as well as those with dependents, etc. The art of total rewards is to design the right “rewards mix” that will attract and retain both today’s and tomorrow’s workforce, in light of labor market trends, business needs and other factors.

Come join us in Manila to hear from an outstanding panel of global and local speakers, at the ATRI Total Rewards Congress.

Live interview on Manila’s ANC Early Edition, with Mimi Ong: Why Total Rewards?

Following the congress, ATRI will be introducing training and certification in total rewards at the specialist, professional and fellow/strategic level. Visit the ATRI website for more information.

For more on the total rewards approach, read Why a Total Rewards Approach is Critical.

To watch my recent interview on ABS-CBN News Channel Early Edition from their facebook page, click here.

Better Focus Groups

I know it’s none of my business, being a comp & ben guy. But I have heard some focus group horror stories lately, and I have to do a public service announcement on how–and how not–to do focus groups. I have run my share and been part of several. So for those of us who as C&B people may not pay enough attention to OD, this is for you.

Focus groups are not like other meetings.

First the similarities: like meetings, you need to make clear to invitees the purpose, agenda and length (PAL) and send any pre-read material on the subject matter. Without clarity of purpose, agenda and length, focus groups can be a waste of time, or even destructive, like badly managed meetings.

Now, the differences.

Unlike meetings, which are for communication, planning, target-setting, progress-checking, expectation-setting, problem-solving, decision-making, damage control or other purposes, focus groups are specifically for listening, a specific type of communication. They are not for decision-making, problem-solving, etc. While the purpose of having a focus group can be related to decision-making or problem-solving, the focus group itself should not include these activities or their dynamics.

As a listening methodology, focus groups should be designed specifically for maximum input from participants. This means people should know the subject matter well enough to provide useful input. This also means you should not invite people who will lack subject matter knowledge, such as new employees who may know little or nothing about the products, customers, current policies, current culture, etc.

Right Group Composition

Group composition matters. Consider having separate focus groups, collectively including all likely diverse viewpoints, but each group consisting of people who will be comfortable speaking and sharing together. If you want managers, select managers who are at a similar level. Don’t mix managers and non-managers, unless the non-managers are very senior and will not be intimidated by the presence of managers.

Focus Group Ground Rules

Unlike other meetings, you must establish ground rules to ensure free flow of ideas, and not force people into awkward situations which will end the focus group prematurely, resulting in failure to get information and failure for you as facilitator.

Ground rules can include:

  • Confidentiality—It is a privilege to be invited to be part of the focus group. Please return the favor by keeping confidential who said what. If any rumors take flight in the organization about “so and so said such and such” at the focus group, we know who started it. You. You as participants are at the top of the suspect list. Do we all agree? (this part is why many organizations don’t do focus groups at all. They cannot establish trust. Very sad, but true.)
  • Personal inputYou represent you, and no one else. Make it clear upfront that focus group participants represent themselves only. They are not the representatives of their departments, their age group, their occupation, location, race, gender, etc. They should speak their personal views. This ensures the facilitator gets an accurate reading of what people actually think, and it also avoids accusation from existing or potential labor unions that the company is setting up and controlling its own union. Any lawyer would agree with this precaution.
  • Keep it Chill (relaxed). You are invited to share your view, not sell it. We are not here to debate or emerge with some kind of consensus, but rather to understand what views there are. Focus groups are not like a statistical survey where you can score how people feel. It is anecdotal in nature, and the facilitator will summarize focus group results by describing key themes or key messages that came through. So there is no need, and in fact it would be quite harmful, for anyone to challenge anyone else’s view. It’s ok to share a view and why you have that view, but you are offering your ideas, not comparing them to others’ views. A debate seeks to reach objective conclusions, while a focus group simply seeks to identify and understand diverse and subjective views. When people dominate focus group discussion—a common challenge—it is usually because they are trying to sell their ideas to others, or because they simply don’t get enough attention in life. This is also a good reason to consider excluding decision makers or influencers in the focus group. If decision-makers are there, speakers will not be sharing ideas with you the facilitator, but will instead direct their gaze at the management influencer in the room in hopes of selling their idea.

Neutral Questions

When you start the focus group with “management is considering introduction of a new…” you can be certain of two things. First, you will not get any dissenting views, except from Americans or other “speak your mind” cultures. Asians will totally shut down if they disagree. Those in hierarchical cultures will support whatever management has apparently decided. So rule number 1 on focus group questions is this:

Keep questions neutral!

Do not give any clues about what kind of ideas or opinions are good/bad, acceptable, not acceptable, out of bounds, etc.

The other thing you can be certain of, if you ask a “loaded” question which indicates management already has a view, is this: people will conclude that the focus group is all for show, that management has no real interest in their ideas because the decisions are already made.

Hope these tips help you have more productive (and less destructive) focus groups!

The Value of Certification

With many professionals being certified in their respective fields (including HR or rewards) I wanted to share my thoughts on the value of certification. This comes from having been a Certified Compensation Professional (from WorldatWork) since 1990 and more recently, the Advanced Certificate in Training and Assessment which I received in 2014 from Singapore’s Institute for Adult Learning. I have been a WorldatWork certification faculty member for many years now, and I wish to endorse certification very strongly for those who are able to pursue it.

  1. Competence—first and foremost, certification from a respected body signifies possession of competencies (knowledge, skill and attitudes) needed for successful performance of a profession or specialization. People want to hire those who “can do” things, not just talk about doing things. A good certification program starts with assessment of learning needs, i.e. identification of the relevant competencies. Without this validation, a person may pass a test, proving they know (can do) something that is irrelevant to the real world.Example: I am developing Asia’s first regionally contextualized competency-based total rewards training and certification program and I have an industry panel plus several subject matter experts helping to validate the courses and exams, confirming that they in fact teach and assess the competencies actually needed on the job for regional rewards specialists, professionals and managers. I have an associate currently reviewing 100 actual comp and benefits job descriptions for actual openings in Asia, and cross-checking my competency framework against the job duties and qualifications.
  2. Confidence—second, certification gives a person confidence. We all get asked “do you know anything about x?” from time to time. Instead of saying “sorry, I’ve never done that” (or even worse, giving a false impression about our experience) we can say “actually, yes, I know a thing or two about x”. Busy decision makers (our bosses) love to hear that. That is an expression of confidence that comes from competence.I sometimes advise junior consultants “don’t let your confidence exceed your competence… at least not by too much!”
  3. Connection—certification links you instantly with others holding the same certification. A community is created among certified practitioners, though usually this is quite informal. Still there is a comraderie and sense of mutual respect.Local networks and associations take initiative and hard work. I was once VP of the Michigan-Ontario Compensation Association, and we held monthly meetings, invited speakers and had a great time networking during breakfast briefings. In this setting, I decided that one day I would like to be one of those speakers.
  4. Commitment—Finally, the process of attaining a certification is an achievement that demonstrates commitment to a goal. It proves you can find time for learning and continuous education. As Ghandi said, “Live like there’s no tomorrow, but learn like you will live forever.” And as my great-great-aunt Margaret used to say, “to stay young you have to keep growing new brain cells”. She passed away at the age of 105 and the above quoted advice was actually given to her by her primary school teacher in the late 1800’s. So I share it with you about 130 years later, just as I received it.Completing my ACTA certification in Singapore was not easy. I am very proud of it and it gives me all of the above. I am now embarking on business mandarin certification, though I suspect this may take several years with some risk I don’t make it to the end. Still, I want to take on the challenge.

Certification marks a level of competence, confidence, connection and commitment. And I can’t seem to think of anyone having these four attributes who has not done pretty well in their work and their lives.

A Very Boring Post

Let me apologize in advance. You will not find “The future of HR” or “disruptive” or AI, AR, analytics, NLP, blockchain or other popular buzzwords or clickbait in this blog post. So, if you are addicted by now to the fortune tellers telling us half our jobs are going away soon and we need to upskill fast, just skip this one and go to LinkedIn, where half the posts are about these things. I read those articles too, and they are important, but that’s not what this post is about.

I will tell you about the present state of organizations and the problems that need fixing, which if not fixed, there may be no organization left to fix, no industry to disrupt, no data to analyze. If you, today’s HR leader in today’s organization, cannot fix these problems today, then you may still lose your job, not to AI, not to a data nerd, but because your CEO sees you as ineffective.

I help clients pay their people more effectively. Just in the last few years, my work has impacted the pay of over 100,000 people, easily. So I am not looking into any crystal ball as I share my observations.

Here are the problems our organizations face today:

  1. Silos—I am guilty here. I teach how to write job descriptions and I help clients develop them. But they are dangerous. At best, they provide important role clarity and accountability and help the organization ensure value for the money spent. Job descriptions also form the basis of compensation structures and other HR processes. But at worst, they act as fences, rigid verticals that box us in, permitting us to use only a fraction of our ability and resulting in punishment for “doing someone else’s job” when we try to collaborate more broadly. Job descriptions literally enable our people to declare “that’s not my job.”

    Illustration: At a big firm, I was in charge of one specialised area, and was not permitted to do broader reward consulting, though I had been global head of rewards for 3 multinationals. In fact, my incentive was based entirely on consulting in my area, despite our CEO stating that all solutions should involve multiple lines of business. Terrible alignment of incentives, for a firm that charges clients for incentive design. As a freelancer, I do what the client needs me to do, and 95% of what I’ve been doing the last 5 years, I would not have had permission to do at the big silo firm.

    Silos stifle creativity, connectedness, cross-functioning and collaboration. Let’s get people focused on needs and opportunities and whole solutions. Let’s encourage (and reimburse!) learning in adjacent areas, not just “job related” training. Let’s recognize and reward those who take initiative to see the whole problem and address the whole problem. The political sensitivity is not the client’s problem. Better to solve the problem that extends beyond your job description, than to tell your client (internal or external) it’s not your area. Agree?

  2. Courage—you cannot outsource or automate managerial courage. Robot, schmobot. Unless robots have balls, it is still up to us to call a spade a spade and take on a tough problem directly. A handphone app is not going to tell the jerk on your team to stop disrespecting the women in the group. Data analytics will not get Bob to pay his low performers less in order to pay his stronger performers more. (Analytics can point the way, but only Bob can submit his worksheet, because Bob is responsible for his budget, not an HR bot.)

    Let’s remember that job security comes from being able to do what others (including robots) can’t, and doing what others don’t want to do, like having confrontational conversations when needed.

  3. Mindset—I get calls almost every week about flexible work arrangements. Seems I am regarded as a guru. In fact you don’t need to be a guru on this topic. Successful implementation of FWAs, like many other things we try to do, come down to culture, i.e. what’s ok and what’s not ok. An organization that believes at the top that the important thing is results—not when or where we work—will need little help with FWAs, which are mostly dependent on department-level common sense. What’s needed most is a mindset change. A “laoban” mentality that believes face requires a big team with butts in seats from 9 ’til 6 will find eventually that all they have are butts in seats from 9 ’til 6.

I promised you boring and I hope you were not disappointed!

Pay Equity without Structured Pay is Just Talk

Can a white male like me be objective about pay equity?

My mother was a feminist. She was also a trainer and nurtured my interest in developing others. She was not only Northwestern University-educated, but she came from a business family and she knew the real world.

I have heard about gender pay equity since the 1960s. Really. No kidding. There were copies of “Ms.” magazine at home, the feminist manifesto, basically. I grew up with a deep sensitivity to fairness. My siblings called me “Father Tom” because I often found myself arbitrating (or having) arguments with them. My mom was from a strict Catholic family where convictions of right and wrong are deep. My dad was a California kid nicknamed Pedro (part Mexican), more laid back, with a simple, less activist sense of fairness, except that he was never paid what he was worth, just like my mom. He was an artist, she a writer.

I am white male, but I have never relied on privilege. I have worked to earn money since age 10. By age 18 I’d had 6 different employers, 10 bosses and a Teamster’s Union membership ID card. I worked in a factory during summer breaks, where one day another guy and I were assigned to dump frozen strawberries into a large container. This other guy, a black guy, and I each manually lifted 20 tons in a single day, dumping a 40-pound tin every 10 seconds. At the end of the day, we had pulled muscles and were drenched in sweat. We looked at each other and nodded in mutual respect when our shift was over. Don’t ever accuse me of privilege.

I was a working student. I maintained a ‘B’ average most of my life. By 19 I was assistant manager of a shoe store, then I supervised a grocery store where I sometimes helped customers by carrying out to their car two 100-pound bags of flour under my arms. By 20 I fired someone for smoking dope. At age 25, I was published by the Wall Street Journal, graduated with honors as Outstanding Management Student, and had four years of actual management experience. But I was first exposed to salary administration at age 24, while taking courses in salary administration, and working part-time as a personnel clerk in a real HR department, doing salary surveys. This was in 1985. No connections, no open doors, no privilege. Just followed my curiosity and was never afraid of hard work.

Back then, the HR profession was already shifting from male-dominance to female dominance, as corporate priorities shifted from union relations to non-discrimination. Women on a quest for equal opportunity and equal pay were encouraged by Civil Rights laws passed in the 1960’s and they were intent on claiming their rights, and achieving positions of power. So they became HR people. So in 1985, I began actually working with pay data. I saw the names, the salaries, but I also paid attention to the job titles and performance ratings.Pay equity

HR and social justice agendas

My first corporate HR job was with a large company. Between me and the CEO were three levels of women, two of them clearly enjoying their “power trip” managing men like me and one (a former nun) just working hard to do the right thing. You are sensing a sexist attitude? I was actually a harassment victim one day, when a woman pressed herself against me and the wall, completely by surprise and very intentionally. She quickly apologized, then explained that she had been abused as a girl. We are close friends to this day. Since then, I have worked for some great bosses, both men and women. I have worked for some real assholes who did not respect women, and some real sexist women who told me to only hire women for high-paying roles, which resulted in some bad hires to be honest. What I am saying is: I am not just another privileged white male giving lip service to pay equity to soothe my conscience. I have hired, coached, developed and promoted females, and to this day, many women of several races count me as a mentor. I’ve known fair men, fair women, sexist men and sexist women.

In short, my brain is hard-wired for fairness in the workplace. I neither discriminate for, nor against women. They do not deserve higher pay or lower pay than men. Women, like men, deserve to be paid for what they do and how well they do it, period. My career as a rewards professional has been devoted to paying people for what they do and how well they do it. I teach these principles to hundreds each year, both the how and the why. I stay quite busy as well helping my clients apply these principles to develop better pay systems, systems that do not discriminate except for the right reasons.

Women, like men, deserve to be paid for what they do and how well they do it.

What is fair pay?

Consider Olympic scoring. There is the difficulty score and the execution/performance score, which combined determine the total score. Olympic competitors are scored based on what they do and how well they do it. And this is the basic concept underpinning modern corporate compensation programs.

Without getting too technical, large organizations manage their largest expense—salaries—by paying people for what they do, using job evaluation methods to assign jobs to pay grades. When people are assigned to jobs, and jobs are evaluated into pay grades, then you can pay individuals within salary ranges linked to grades, based on their performance, through annual merit reviews or other rewards.

Pay equity laws do not state that men and women should be paid equally. They state that men and women doing the same work, or in some cases work of equal worth, must be paid the same, except for differences attributable to performance or other work-related factors other than their sex.

Clearly, a woman working as receptionist is not entitled the same pay as a man working as a department manager. But a female department manager should be paid the same as a male department manager, all things being equal such as department size, performance, etc.

So it is essential that an organization wishing to pay fairly must have a process for grading jobs and for paying individuals based on performance, in those jobs.

How do you grade jobs? How do you know which women to compare to which men? It boils down to mundane job descriptions, plus well-designed methods for measuring which jobs are bigger than others, which we in the profession refer to as job evaluation.

How do you know which women to compare to which men? …you must have sound processes for job evaluation and performance-based pay.

Before you can achieve pay equity, your organization must have sound processes for job evaluation/grading, and for performance-based pay.

I will not explain in detail the ‘how’ of job evaluation and performance-based pay in a blog. It is not possible. Attend one of my courses offered through SNEF, such as Comp 101 or Comp 102. Or contact me.

Talk is cheap. Job evaluation and transparent performance-based pay systems enable action, fairness, and gender pay equity.


The Comp & Ben People

Within every large organization is someone responsible for comp & ben, short for compensation and benefits. These are the experts in who should earn what. If you don’t know who they are, that’s ok… they know who you are. They also know your title, pay grade, salary, allowances, bonus level, performance rating, market value and why your salary is what it is.


By now you are thinking ‘hmm, I’d better be friendly to my comp & ben person.’

Sure, be friendly, but keep in mind that your comp and ben person is the last person in the world who would be influenced by how you regard them. You see, comp and benefits people are the (mostly-)invisible guiding hand, assisting managers and their HR colleagues on all matters relating to who gets what, and devising analyses, structures and tools, handling highly sensitive information with the goal of making sure everyone is paid properly. They don’t control your salary budget, but they have enormous influence on your company’s (usually) biggest expense: people. As a manager, you control your budget, but the guidance you get from HR starts with comp and ben.

These are the comp and ben people, and I am one of them. In fact, I have been a comp and ben guy since March 1985, when I first participated in benchmark salary surveys for my company, handled all the benefits claims and maintained the HR records. We had no computer, and were were called “Personnel” in those days. But one thing hasn’t changed these 33 years: I still love figuring out who should make what in an organization.

We follow a set of principles, we call total reward principles:

  • It’s not just about salary, but the whole package, when determining what is competitive;
  • Different people value different rewards differently; needs and preferences vary by many variables including job level, location, demographics, individual performance, etc.;
  • Pay must be linked to performance to achieve organizational success;
  • Designing a rewards package starts with knowing your business and your talent/people requirements;
  • We aim for the best rewards “mix” that will attract and retain talent, avoiding over-reliance on salary level;
  • Pay doesn’t motivate (for most), but when pay is too low or unfair, it certainly demotivates;
  • Managing pay is both art and science, requiring an understanding of business, ability to work with numbers and applied psychology, with knowledge of contract law and regulations;

There are many areas of knowledge, skill and attitudes required to be an effective comp and benefits specialist.

If you are in HR, but have never been responsible for comp and benefits, look for a chance to give it a try. It’s not for everyone: some of us are, uh.. introverts, analytical, and a bit rigid on matters of fairness and consistency. Go have lunch with C&B and get to know their world.

If you are not an HR person, you should be glad your company has a qualified, competent C&B person. Because of them, pay is far more fair, market-aligned and consistently administered. Treating them well won’t affect your pay. But it doesn’t hurt either.

Here’s to all the comp and ben people. Have a great 2018. May there be world peace in your organization (on pay matters, anyway), and may all your compa-ratios be one.



10,000 reasons to be thankful

As of today, 10,000 people have visited my website to gain ideas or find help on total rewards. Seems we are not alone, even though we are usually just one or two persons taking a concern for C&B, mobility, flex, recognition wellness, etc. where we work.

My intention is to continue to build both competence and community among the members of our profession.

We make a big difference when we evaluate a job, recommend a salary, answer a benefits question, help negotiate to secure needed talent from another country or treat sensitive data with care.

Strategically, we can contribute breakthrough ideas to support business growth, profitability, productivity (employer outcomes) as well as higher levels of retention, engagement, diversity, growth and motivation (employee outcomes aligned to support employer outcomes.)

Coming soon:

  • Wikipedia page on Total Rewards (which any of you can edit!)
  • Ramp-up of the Certified Total Rewards Professional (CTRS, CTRP, CTRF) certifications — 3 levels of competency-based certification in total rewards, to be offered in ASEAN and Hong Kong through top partners and master instructors, and validated by a stellar industry panel
  • Increased consulting and learning resources in Singapore and SEA region

Thanks for visiting this site! I will continue to post what I hope is useful to you.