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4th Quarter 2013 | Volume 22 | Number 4
Transforming the Role of Money in the New Economy:
Removing Pay as the Star of the Show
By Nancy Day, Ph.D., University of Missouri — Kansas City
The globally competitive, knowledge-based economy requires a transformative approach to rewards systems — one that moves pay from its role as primary motivator to only one component of a total rewards system. This article makes the case for this transformation by discussing research showing pay is not an optimum motivator, particularly for complex tasks, and that higher pay does not consistently predict happiness or well-being. Further research explains why organizations and individuals continue to consider money so important. Recommendations are presented for rewards leaders to move their organizations toward a more innovative total rewards system, better supporting the new economy.
Measuring Total Rewards Through Conjoint Analysis:
A Decade of Results
By Federico Lopez, Thomas More Consulting Group and Andres Bello
This article presents the most prevalent results and learning experiences from 10 Venezuelan case studies that used conjoint analysis techniques to measure employees' relative preferences on different total rewards models. Conjoint analysis, which measures relative preferences, is especially effective when measuring the impact of total rewards since it makes financial and non-financial elements comparable.
Rewards Next Practices: 2013 and Beyond
By Dow Scott, Ph.D., Loyola University Chicago, and Tom McMullen, Hay Group
More than 300 WorldatWork Association members participated in a 2013 survey that asked them to rate the emphasis their organization places on different dimensions of broad-based rewards programs as well as whether they would increase, decrease or maintain their focus on these aspects of rewards in the future. Findings indicate that rewards professionals seldom assess the return on investment (ROI) of their rewards programs. Additionally, they question the motivational value of existing rewards strategies and programs, the effectiveness of long-term incentives and the ability of these programs to differentiate base pay and incentive pay between average and top performers. In the next two to three years, rewards professionals intend to increase their focus on rewards program implementation and communications, improve the motivational value of their rewards programs, better manage the pay-for-performance relationship, develop better career/development platforms, and improve the performance-management process.
Waiting for the Next Big Idea in Rewards Management
By Frank Giancola
For many years, compensation professionals experienced their share of big ideas offering a deceptively simple solution to an intractable problem or looming crisis. This paper examines the status and sources of the current big ideas, considers possible replacements and suggests a way to make sense of the current state of conceptual thinking in HR.
Private-Sector Pension and Retiree Health Benefit Funding
By John G. Kilgour, Ph.D, California State University, East Bay
This article examines retiree benefit sponsorship and funding in the private sector. A following article in the next issue will address the same topic in the public (governmental) sector. Most of what is known about retirement-benefit funding comes from traditional defined benefit pension plans. It is hard to discuss other post-employment benefits funding without reference to pension funding. Together, they are the organization's retirement-benefit financial obligations.
The Three Dimensions of Pay for Performance
By Stephen F. O'Byrne, Shareholder Value Advisors Inc.
This article shows how to use historical pay data to measure the three dimensions of pay for performance (leverage, alignment and relative cost); how the leverage and alignment of top management and director pay at S&P 1500 companies has changed since 1996; and how to design a simple pay plan with annual performance share grants that achieves target pay leverage with perfect alignment and zero relative cost. Target-pay leverage should be a standard element of compensation philosophy.
Letter to the Editor
Published Research in Total Rewards