CHICAGO—Managing total rewards globally has become a challenging and complex exercise. The multitude of issues to contend with include:
The scarcity of highly skilled talent.
Global demographic changes.
Fewer available resources for pay increases.
The increasing costs of health care and retirement.
The decline of the defined benefit paradigm around the world.
“Those of you who work in global benefits, my heart bleeds for you,” HR expert John Rubino, president of Rubino Consulting Services, said at a June 17, 2013, session at the Society for Human Resource Management (SHRM) Annual Conference & Exposition.
At the same time, global HR trends are challenging employers as they seek to attract the services of top performers, Rubino explained. Those trends include the breakdown of the traditional base pay structure, less emphasis on internal equity, and more variable pay in the compensation mix.
“This is just an inkling of how highly complex it is to do global human resources,” he said. “It’s tough enough doing it in one country. Ratchet that up by about a thousand and you have an idea of what it’s like to do this around the world.”
The Exchange Relationship
In today’s competitive global environment, there is a new exchange relationship between the employer and star employees, Rubino said. The employer provides valuable total rewards, and the employees provide their time, talent, efforts and skills. “None of this is dictated in a command-and-control environment anymore. If you’re a young person with the valued skills, you can dictate to the organization what you want.”
Attracting the Talent You Want
So what are you offering in your total rewards package to attract and engage the talent you seek?
“You aren’t going to do it with just a paycheck,” he said. “Total rewards motivate star performers.”
Traditional compensation systems don’t work in a competitive global employment environment where talented workers are looking for “true pay for performance,” Rubino observed.
“Base-salary merit increases are just absolutely useless. They are, in fact, de-motivational.” Thus, employers should consider eliminating this type of compensation, which recognizes the job instead of the person in the job, he said.
There are several problems with the practice, according to Rubino. A meager 2 percent to 3 percent increase is not motivational. Then, pay movement is accelerated for those lower in the range and decelerated for those higher in the range. For those who have reached the range’s top, generally, there’s no increase. “You’re actually encouraging your talent to leave the organization,” he explained.
“In my estimation, you have to give at least 20 percent of your employees zero to have enough money in your budget to truly reward your top performers.”
If you don’t personalize rewards for your star performers, they will leave, he stressed.
“They know they’re good. They’re employable. They don’t understand what “loyalty” means, and I don’t blame them. Personalizing rewards now is key.”
Roy Maurer is an online editor/manager for SHRM.