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4th Quarter 2014 | Volume 23 | Number 4
Assessing Rewards Effectiveness:
A Survey of Rewards, HR and Line Executive
By Dow Scott, Ph.D. | Loyola University Chicago
and Thomas D. McMullen | Hay Group
This research examines senior management's interest in evaluating rewards programs, reveals how rewards-program effectiveness is evaluated, assesses the effectiveness of these evaluation methods and examines the commitment of rewards professionals, HR professionals and line executives to evaluate rewards programs in the future. Respondents represented a variety of industries and a range of organizational size. The findings indicate: (1) a strong interest in assessing rewards-program effectiveness by senior leaders, rewards professionals and HR professionals; (2) substantial variation in how effective assessment methods were perceived by senior management, rewards professionals and HR professionals; and (3) variations among these groups on how rewards programs would be assessed in the future. Based on these findings, the authors' recommendations for improving assessment processes include development of multiple criteria consisting of financial, operational and perception metrics for evaluating rewards programs and inclusion of the evaluation methods in the initial program design.
The Business Case for Compensation Technology
By Alison French, CCP, GRP | IBM
Despite the foundational role compensation plays in any talent strategy, most organizations continue to manage compensation market analysis, strategy development and program administration using spreadsheets.
This article discusses the business case and practical implications for the selection and implementation of technology solutions to manage compensation. Specifically, it addresses questions like:
Measuring Total Rewards: Conjoint Analysis vs. MaxDiff Scaling
By Federico Lopez | Thomas More Management Consulting
and Andres Bello | Catholic University Institute of Advanced Management Studies (IESA)
- Which compensation process parts can be automated, and what types of tools exist?
- Why are organizations choosing to move from spreadsheets to technology solutions?
- How can technology solutions improve service delivery and quality?
- What is the business impact of using tools to build a more effective compensation strategy?
Traditionally when measuring total rewards, conjoint analysis has been to determine the relative importance of the categories or elements. However, with a large number of items, conjoint analysis may take a long collection time and its results may be biased. Maximum difference scaling is an alternative method that allows the determination of relative preferences within a large number of items and in significantly less time, helping identify which specific tools within the total rewards options are preferred by the employees. Practical experience then suggests that conjoint analysis can be used to detect the weights of total rewards' general elements and maximum difference scaling to determine which tools are specifically preferred by employees.
Organization Agility and Talent Management
By Edward E. Lawler III, Ph.D., and Christopher G. Worley, Ph.D. | Center for Effective Organizations at the USC Marshall School of Business
To be sustainably effective, organizations need to change what they do and how they do it at an ever-increasing rate. Creating an agile organization requires taking an approach to organization design and management that allows organizations to sense what is changing in the environment, develop and test possible changes, and quickly implement changes. The payoff is worth it; research shows that organizations that are agile can outperform others over decades. This article uses case studies on Netflix and oDesk to show that organizations can create an agile workforce by adopting a set of talent management practices that encourage employees to learn and develop, and by reducing the transaction costs associated with changing the skill sets in their workforces.
Employee Engagement: The Unusual Birth and Development of an HR Concept
By Frank Giancola
Employee engagement, a very popular concept in human resources, was developed primarily through the efforts of HR consulting firms, largely without the significant involvement of academic researchers. In the past, major new concepts in organizational behavior typically entered the business world after many years of study by academic researchers. HR professionals will benefit from knowing how this concept was developed and who contributed to its growth and competed for a place on the HR agenda. This information will serve them well as consumers of engagement products and services.
The PPACA and Talent Management: From Early Movers
to a Culture of Health
By Steven Noeldner and Matthew Stevenson | Mercer
While many organizations have been anticipating health-care reform by adopting a total health management approach, even the best health-management strategy will not achieve optimal results without a focus on the basic requirements. This requires: visible buy-in from senior management and business leaders; policies and practices that support a culture of health; comprehensive, integrated and easy-to-use programs; and meaningful and timely employee incentives. The new era of health-care reform has been well-modeled by organizations that took health management seriously before the Patient Protection and Affordable Care Act (PPACA) became law.
Pay for Performance: Hit or Miss? An In-Depth Look at the Relationship Between Pay and Performance
By Yonat Assayag, ClearBridge Compensation Group, and Carl J. Stegman | Fidelity Stock Plan Services
A new reality for companies today is to demonstrate a strong pay-for-performance relationship in their executive compensation programs. Companies have increasingly turned to long-term performance awards as a means for enhancing the alignment of executive pay and performance. The authors' companies teamed up to analyze the pay-for-performance relationship of performance awards. The study analyzed the overall alignment between pay and performance, as well as identified which measures and performance period lengths correlate with a stronger pay-for-performance relationship. Furthermore, the authors analyzed this relationship in light of economic conditions and among top, middle and bottom performers.
What the Research Says About Pay Secrecy
By Nancy E. Day, Ph.D. | University of Missouri — Kansas City
Pay secrecy is the norm for many, if not most, American workers. However, the popular press and some thought leaders are advocating total pay openness — making all employees' salaries public — as the route to truly innovative, collaborative management. Rather than focusing on pay secrecy or openness, organizations should carefully design and implement pay-communication programs. The article reviews research that affirms a carefully designed and implemented pay-communication system can increase perceptions of fairness and satisfaction with pay.
Published Research in Total Rewards