THE CRITICAL LINK: GLOBAL TOTAL
REWARDS CULTURE, STRATEGY AND
YOUR BOTTOM LINE
Deborah Voyt, Ph.D.
Presented at D-SHRM Total Rewards
October 2013
1
Global economy and need to manage costs
has changed the total rewards model
• Traditional view of total rewards - pay
and benefits
• Limited compensation budgets and
benefit reductions
• Companies must focus on other key
total rewards elements aligned with
organizational culture
• Maximize the employee value
proposition - globally
• Attract, retain, and engage knowledge
workers
• Global framework with local flexibility
2
New Total Rewards Model
WorldatWork Total Rewards Model
• Compensation
• Benefits
• Performance and
recognition
• Development and
career opportunity
• Work life
Total rewards model is flexible and tailored to meet
the needs of the business, employees, and aligned
with organizational culture
3
Organizational Culture and Total Rewards
• Highly successful companies have
strong unique cultures
• Support employees to achieve
strategic objectives and enhance
organizational performance
• Total rewards systems design and
how individuals are rewarded
communicate an organization’s
beliefs and values
• Attract the right employees
• Key to understanding organizational
culture
4
Total rewards can support or detract
• Attract individuals with right values, skills, knowledge, abilities
• Motivate to further organizational goals and objectives
• Reward systems that do not fit the culture can negatively impact
performance and employee engagement
• Business culture and local country culture
5
What is culture?
• It’s simple “the way
we do things around
here”
• A set of shared,
subconscious
assumptions and
tacit beliefs
6
Total rewards systems reflect and
reinforce the cultural norms
• Primary signal of organizational values
and culture
• Business leaders and human resources
professionals are placing greater
emphasis on culture and the fit with total
rewards to attract, retain, and motivate
employees to increase individual and
firm performance
• A survey of 1,200 international business
executives show that 90% believe that
corporate culture is as important as
business strategy for organizational
success (Bain & Company, 2007)
7
Challenges to Culture and Change
•
•
•
•
New competitors
Demanding customers
Complaining staff
Decreasing profit and
sales
• Merger or
reorganization
• Going global
8
Culture has an impact
Research has shown
the powerful impact on
performance and long-term
effectiveness of
organizations
9
Culture makes the difference
The effects on
employee morale and
retention,
commitment,
productivity and
innovation are well
documented
10
If you don’t use culture,
culture will use you
• If you’re not aware, it will
shape you
• Human beings Copy,
Coach, and Correct each
other to fit into the group
• So make sure Culture
works for you, instead of
against your necessary
change
11
Competing Values Framework
Cameron and Quinn, 2006
12
Survey Questions
• The Organizational Culture Assessment Instrument (OCAI)* was used to
identify the dominant culture of your organization based on the
Competing Values Framework (CVF)
• Three open-ended questions were examined, organized, and coded into
total rewards categories or broad themes
• Question 1: The most important characteristic or attribute that makes my
organization's total rewards strategy effective is:
• Question 2: The one or two characteristics or attributes that need to be
changed to improve the effectiveness of my organization's total rewards
systems are:
• Question 3: Success of the total rewards system at my organization is
measured by:
* OCAI developed by Cameron and Quinn (2006)
13
Company Profiles
Organization Type
Distribution
Organization Distribution
Size
Number of
employees
For profit, privately
held/partnership/consultancy
38%
> 5000
54%
For profit, publicly traded
42%
1000 - 5000
31%
Governmental
12%
50 - 250
8%
Nonprofit
8%
500 - 1000
8%
14
Organizational Culture Type Survey Results
Culture Type
Distribution
Number of
Companies
Clan
31%
8
Adhocracy
4%
1
Hierarchy
27%
7
Market
38%
10
15
Top 3 Themes Identified
Pay-program attributes, Alignment, and Benefits
• Pay-program attributes (22%)
– Needs improvement (14%); effective (8%)
– Funding, stability, pay differentiation, timing
• Alignment (14%)
–
–
–
–
Needs improvement (6%); effective (8%)
With organizational strategy, objectives, and results
Other total rewards elements and human resources systems
Alignment with organizational culture and employee line of sight
• Benefits (13%)
– Needs improvement (7%); effective (6%)
– Competitive position to the market
– Need to improve retirement plans through reinstatement of the
company 401k match
– Education reimbursement
16
Organizational Culture Type Survey Results
17
How Total Rewards Success is Measured
Retention/Turnover
Total
30%
Employee
engagement/commitment
surveys
17%
Not formally measured
11%
Company Financial
Performance
9%
Ability to Recruit
9%
Cost
7%
Pay Program Attributes
4%
Program Utilization
4%
Responses Left
Blank/Unknown
4%
Customer Feedback
2%
Leader Effectiveness
2%
18
Clan Culture
• People-oriented, friendly
• Leader: facilitator, mentor,
team builder
• Value: commitment,
communicate, develop
• Effectiveness: development
and participation
Cameron and Quinn, 2006
19
Total Rewards Major Themes
Clan Culture
• Pay-program attributes – 8%
– Stability and funding
– Link between pay and performance
• Alignment – 5%
– Alignment with organizational strategy and other HR
systems
• Benefits – 3%
– Organizational culture
• Work environment – 3%
– Work-life balance
20
How success is measured
Clan Culture
•
•
•
•
Retention
Employee engagement scores
Attraction
Total rewards utilization
21
Clan Culture
Total Rewards Considerations
Rewards Emphasis
• Respect the organization’s traditions
• Focus on interpersonal and
employee needs
Base Pay
• Competitive or above (caring family)
• Pay reductions rather than layoffs
Bonus
• Team-based
Benefits
• Inclusive and competitive; flexible
Performance and Recognition
• 360 degree feedback
• Competencies and values rather
than numeric ratings
• Group recognition
Development and Career Opportunity
• Individual and team important
Work-Life
• Important to take care of family
22
Market Culture
• Results-oriented, competitive
• Individuals are competitive and goaloriented
• Leader: hard driver, competitor,
producer
• Value: market share, goal
achievement, profitability
• Aggressively competing and
customer focus
Cameron and Quinn, 2006
23
Total Rewards Major Themes
Market Culture
• Pay-program attributes (6%)
– Link pay and performance
– Timeliness
• Alignment (6%)
– Alignment with organizational strategy
– Integration with other reward programs
– Alignment with organizational culture and other human
resources systems
• Development and career opportunities (4%)
24
How is Success Measured
Market Culture
•
•
•
•
Retention – 40%
Exit interviews – 20%
Cost – 20%
Not measured – 20%
25
Market Culture
Total Rewards Considerations
Rewards Emphasis
• External market focus
• Emphasis on individual performance
• Earn rewards based on achieving
agreed-upon goals
Base Pay
• Competitive with market
• Differentiate based on performance
rather than seniority
Bonus
• Individual/company performance
Benefits
• Employees take greater
responsibility
Performance and Recognition
• High performance standards that
differentiate individual performance
• Goals and expectations
• Spot awards and individual
recognition important
Development and Career Opportunity
• Individual development
• Use of “stretch” assignments
Work-Life
• Important for recruiting
• Employee resolves with manager
26
Hierarchy Culture
• Controlled, structured
• Leader: coordinator,
monitor, organizer
• Value: efficiency,
consistency, timeliness,
uniformity
• Control and efficiency and
capable processes
Cameron and Quinn, 2006
27
Hierarchy Culture
• Benefits (4%)
– Providing good benefits
• Communication (4%)
– Providing open communication about total rewards
– Value of total rewards
– Linkage to business strategy
• Development and career opportunities (3%)
– Need to improve
Cameron and Quinn, 2006
28
Hierarchy Culture
Total Rewards Considerations
Rewards Emphasis
• The reward systems respect the
hierarchy and the need for a
predictable and secure environment
Base Pay
• Competitive
• Well-defined procedures important
Bonus
• Individual/company performance
• Targets support hierarchy
Benefits
• Traditional with focus on long-term
job security to maintain a smoothrunning organization
Performance and Recognition
• Highly structure performance
management systems
• Formal recognition plans with welldefined criteria
• Service awards
Development and Career Opportunity
• Important for advancement within
the structure
Work-Life
• Not highly valued – slow to adopt
29
How is Success Measured
Hierarchy culture
•
•
•
•
•
Retention (5%)
Employee engagement scores (1%)
Ability to recruit (1%)
Cost (1%)
Customer feedback (1%)
Cameron and Quinn, 2006
30
Adhocracy Culture
• Dynamic, entrepreneurial
• Leader: innovator, visionary,
entrepreneur
• Value: innovation, agility,
transformation
• Innovativeness, vision and
new resources
Cameron and Quinn, 2006
31
Total Rewards Major Themes
Adhocracy culture
• Pay-program attributes
– Pay above market levels
– Alignment with future business/growth strategy
• Benefits
– Retirement
– Education assistance
• Work-life balance
• Respect for employees
32
How is Success Measured
Adhocracy culture
• Company performance – 50%
• Cost – 50%
33
Adhocracy Culture
Total Rewards Considerations
Rewards Emphasis
• Attract creative individuals who can
take innovation to next level
Base Pay
• Above market based on individual
talent
• Skill-based pay a consideration
Bonus
• Individual/company performance
• Patents/innovation
Benefits
• Flexible and latest innovations
Performance and Recognition
• Support innovation
• System encourages mistakes
• Punishes inactivity
• Recognize and celebrate success
Development and Career Opportunity
• Symposiums and forums
• Tools, technology, and systems to
support individual important
Work-Life
• Flexibility is important
34
Questions
35