Pay People Right Zingheim & Shuster Chapter 1 Total Rewards and the Six Principles

Reward Principles Create a positive and natural rewards experience Align rewards with business goals to create a win-win partnership Extend people’s line of sight Integrate rewards Reward individual ongoing value with base pay Reward results with variable pay

Create a Positive and Natural Reward Experience Involvement in the process Communicate and educate Changes must be made as positive as possible within the constraints of the business message Examples, Monsanto, GE, Microsoft, Intel, others

Align Rewards with Business Goals to Create a Win-Win Partnership People as stakeholders Alignment creates value for stakeholders Rewards emphasize performance at the point where customers measure value Company must feel it’s getting value, and people must believe company expectations are reasonable

Extend People’s Line of Sight Company financial performance and customer satisfaction may appear remote Connect the person to these element through appropriate pay systems People become dislodged when their goals are only a short distance away, and don’t appear to relate

Integrate Rewards Use each reward tool for what it does best Many facets Create a combination that: Supports the role the company wants its people to play Defines how the workforce shares the results of the organization’s success

Reward Individual Ongoing Value with Base Pay Three dimensions that determine the value of an individual to the organization: The skills and competencies that the company needs and the individual utilizes to generate results The individual’s consistent performance over time, whether individual results or contribution to team results The individual’s value relative to the labor market

Reward Results with Variable Pay Companies need results People make those results happen Rewards based on results Variable pay is the primary (paramount) method for linking the workforce to customer goals, extending line of sight, and sharing in the success of the enterprise (Author’s perspective)

Components of Total Rewards Individual Growth Compelling Future Total Pay Positive Workplace

Individual Growth Investment in People Development and Training Performance Management Career Enhancement

Compelling Future Vision and Values Company growth and success Company image and reputation Stakeholdership Win-win over time

Total Pay Base pay Variable pay, including stock Benefits, aka indirect pay Recognition and celebration

Positive Workplace People focus Leadership Colleagues Work itself Involvement Trust and commitment Open communications

Total Reward Strategy Impact on Total Reward Strategy of: Business Strategy Organization Design Human Resource Strategy Workforce Company Culture