2nd Quarter 2005 Volume 14 Number 2

Cover Story
From Octopus to Sharks
The Current and Future Roles of the Rewards Professional
Duncan Brown, Chartered Institute of Personnel and Development, and Peter Christie, Watson Wyatt Worldwide

The route to greater influence for rewards professionals sometimes is portrayed as moving into the executive suite and abandoning their traditional activities. However, to be a successful business partner, rewards professionals need to play a variety of roles, particularly change agent, as well as technical expert and culture champion. And this multiple-legged, ever-shifting role only works when it is carried out in the context of strategic understanding and business fit.

This article, supported by quantitative data from several UK studies, examines the concept of HR business partnering and how it impacts the work of compensation and benefits professionals. In addition to using author David Ulrich’s business partner model, the authors shed light on the discussion with a number of illuminating insights from 20 senior professionals in major organizations. Full Text

Making the Most of Virtual Working
Nidhi Verma, Hewitt Associates

It is an undeniable corporate truth of our times. Rapid progress in technology and communication are changing the business landscape and leading the way for new work arrangements. Workforce agility and the need for an “always accessible” employee are today’s corporate reality. Telework gives an entirely new meaning to the notion of workspace and workday.

This article highlights the trends in virtual working, delves into the contradictions and challenges surrounding it and proposes a new manifesto for managers of virtual employees to enable them to make the most of this new paradigm of where, when and how employees work. Full Text

Should Do, Can Do, Will Do
Setting Incentive Goals That Yield Results
Seymour Burchman and Blair Jones, Sibson Consulting

Goal setting and measurement are at the heart of every executive incentive plan design. Many companies, however, are wary of setting goals in the current environment due to the uncertainty of business conditions and other pressing factors.
This article proposes an approach that can help boards and management make better decisions about setting goals, establishing measures and determining pay, whether on an annual, intermediate or long-term basis. The primary objective of goal setting and measurement is to select measures that align with business strategy. Companies must focus on critical goals and ensure that plan participants understand the measures and how they can influence the outcomes. Full Text

An Inside Look at Compensation Committees
Mark Reilly, 3C-Compensation Consulting Consortium, and Dow Scott, Ph.D., Loyola University Chicago

This paper investigates how 21 compensation committee members who serve on 51 boards feel about the increased scrutiny and proposed changes to the executive compensation process. Based on these interviews, it would seem that little has changed in the way compensation committees are selected and operate. Most committee members were chosen because of their relationship with either the CEO or another board member.

Although some members would like to make changes in how the committee operates, they are unwilling to take a strong stand on these issues and risk being ostracized by other board members. Other than increasing the time spent on board member duties, committee members feel that governance initiatives like compensation committee charters have not impacted how the process really works. Full Text

HR Involvement Critical to M&A Success
Robert A. Bundy, Mercer Human Resource Consulting

HR representatives often are not at the table with their colleagues from finance, operations and other functional areas during the early stages of mergers and acquisitions. This article stresses the importance of HR’s involvement from the start with regard to M&A discussion, decisions and due diligence to ensure a smooth integration.

People issues — ranging from the integration of compensation and benefits programs to workforce restructurings and labor agreements — play an integral part to the success of any merger. The author explains four stages of a deal, and then discusses what can and should be changed from an HR perspective to obtain better results. Full Text

High Mobility International Employees
How Best to Manage and Pay Them
Geoffrey W. Latta, ORC Worldwide Inc.

For large multinational organizations that strive to operate their business on a truly global basis, an international cadre of highly mobile employees are expected to be available for relocation worldwide, often moving every few years to another foreign destination. The key management challenge for companies with such employees is ensuring that their international mobility policy and administration are integrated with their global talent management program or high-potential program.

This article examines the rationale for using an international cadre, explores career and management concerns that must be addressed with regard to this special group and presents options for the best compensation approach. Full Text

Rethinking Hedge Funds
Harry Levitt and Brian Ellerman, Mullin Consulting Inc.

Due in large part to arbitrary government-imposed limits on tax-advantaged 401(k) contributions, any meaningful executive retirement savings will have to take place in deferred compensation arrangements. Despite recent regulatory restrictions, these plans will represent a larger and larger portion of an executive’s savings.

This article explores the use of hedge fund of funds (HFOF) in deferred compensation plans as a tool to lower portfolio volatility and dramatically improve an executive’s risk/reward ratio. The authors provide background information on hedge funds, historical returns, volatility and market correlations on HFOF, and explain how to implement HFOF choices in deferred compensation plans today. Full Text

The Integrated Approach to Optimizing Productivity
Jamie P. Monat, Worcester Polytechnic Institute

Almost 30 years ago, Steven Kerr published an article titled “On the Folly of Rewarding A, while Hoping for B,” which describes how American business, government and society reward undesirable behavior while failing to motivate employees to achieve desired goals. Yet today, employee behavior-reward associations are no better, and corporate productivity continues to suffer.

This article explores the reasons that American managers are missing a key opportunity to dramatically enhance employee productivity. It concludes that the solution requires an integrated system comprising employee goal-setting, behavior setting, metrics and rewards (GBMR), linked together in a self-supporting structure. Full Text

The Total Rewards Professional's Guide to 24/7 Work Schedules
Frank L. Giancola

Hospitals, public utilities and other providers of critical services have used 24/7 work schedules for decades, as have capital-intensive and continuous-process industries, such as steelmaking and petrochemical processing. In recent years, retailers, customer contact centers, global manufacturers and service industries, such as banks, have begun to use them because of the trend to 24-hour shopping and globalization of business processes.

Futurists predict that the trend in 24/7 work will continue with the growth of an “Internet-oriented, non-stop marketplace” culture. Given the prevalence and expected growth in 24/7 operations, total rewards professionals would be wise to grasp a basic understanding of 24/7 work schedules and how they affect rewards systems. Full Text