Flexible Compensation Packages

crop doctor showing pills to patient in clinic

I ran a poll recently on Linkedin and asked if people would prefer to have a flexibility in customising their compensation packages. An example would be that the company would provide a total compensation amount, e.g. $ 100,000 and let the employee choose how they would like to split it into base salary, bonus and equity.

The post received more than 2000 impressions however the voting ended with only 36 votes. 75% of participants voted for “yes” and the rest was either maybe or no.

This shouldn’t mean that I’m advocating for this type of approach. At least yet. However, it’s interesting that people would love to see that flexibility and individualisation. But…
(of course, there will be a but!)

What are the implications of such a practice?

Pay equity

The first and foremost challenge it’s going to create is the pay equity. As employees will choose different splits, this would create an unstandardised approach to base, guaranteed compensation.

Although it’s maybe less relevant internally as part of the organisation culture (of course, if communicated effectively), it would definitely impact employer/company branding when it comes to regulatory reporting.

Pay for Performance Management

That’s somehow the continuation of the above. As the individual selection of splits, it’s going to be extremely hard to implement a standardised pay for performance methodology as performance is “relative” and the benchmark is peers. Imagine the peers have no standard in their pay as the baseline: How can you effectively assess performance, and even if you do, how do you translate it to pay without disrupting that fairness?

Administrative load

Well, this is probably one of the most important reason that makes things complicated in this sense. Administrative load will be extremely high due to requests to customise employee pay data and it will definitely require quite flexible HRIS systems to accommodate that. There should be some gatekeeping to manage the customisation frequency, too.

Market volatility

Well, it’s going to be super disruptive to the market. Well, this might not be your problem in the short-term but it’s going to be hard to explain things internally down the line if there would be any competitiveness issues despite this approach.

Linkage to business strategy

Well, this is the main challenge. How is it possible to enable people to work towards the vision and mission of your organisation is through a solid total rewards strategy and its implementation.

If you allow people to customise their packages, technically you’re allowing them to play with that “linkage” as they want and this makes the organisation lose that control.

It’s extremely hard, if not impossible, to connect people with the broader strategy if their short- and/or long-term variable compensation is not or not enough linked it.

As an example, you have a bonus program which has a multiplier that’s decided based on the company’s success in terms of revenue growth and that’s a company priority. If the employee chooses to minimize the bonus portion in their package, how would it be possible to keep this person engaged and (to an extent) accountable if you don’t hit that revenue growth?

Overall, this sounds like a cutting-edge approach to rewards management. If the challenges that I mentioned above could be sorted, it might be an amazing lever to pull when it comes to talent attraction, motivation and retention. In the meantime, I do not expect the companies would disrupt the current portfolio of programs but it’s a good food for thought.

Photo by Karolina Grabowska on Pexels.com

Closing the gender pay gap

I’m passionate about pay equity. I think this started with me being a fan of underdogs. Somehow I relate to them on a personal level or their stories are really touching my heart. When it comes to pay; equity is critical.

Relating that instinct to my profession, there comes the pay equity. In a more specific way; gender pay. I don’t think the value of effort, time and experience should be limited by a physical, mental or social categorization. Gender being a major one and unfortunately it’s been used for segregating the workforce for decades (or even centuries!)

How can we close it?

Here are my thoughts after working on a lot of those projects. I tried to list them down and also give some sort of explanation for each.

1. Everything starts at hiring

I studied engineering and worked specifically a lot in the field of process management. While building processes, there’s a key element and it’s the most obvious one: input (or prerequisites) – If you think an employee’s life cycle in an organization as a process, their hiring is the input. Now, also remember that famous quote: “garbage in, garbage out”

That exactly applies to gender pay gap. We should clear the hiring decisions and eventually compensation packages free from a potential bias around gender. Scientifically proven, female candidates provide a lesser amount of current compensation data and have less tendency to negotiate for higher compensation.

Companies should avoid lowballing offers and take the advantage of (lack of) these actions.

If you pay a certain amount for a job, it shouldn’t be influenced by the current status of the candidate.

2. Workforce distribution matters

Well, the chances you dominate the statistical outputs as a minority is pretty low. If you even do, then you are the one who’s skewing the data anyway.

In that case, having an as equal as possible headcount distribution by gender is important. This would ensure that median pay is more standardized and impact the overall rates in an equal importance (or weighting).

3. High paid jobs shouldn’t be dominated by one gender

This is unfortunately the truth in our current society. At least speaking for the last 3 or 4 decades, most of the highly paid jobs, e.g. Engineering, are dominated by male workforce. This is also closely related to the point 1 above. STEM education is more favored by male students and we see almost a handful of women studying engineering in each class year compared to tens or maybe hundreds.

I can clearly remember that my class year in my university had only 4 women vs. 200+ men. We simply cannot talk about equity where the stakes are not equal at all.

4. Your boardroom should be the example

This is also a little bit related to the above. In the basic organizational design, the compensation will be directly correlated with the hierarchy – which makes sense; no questions on that.

The issue is though who is taking those seats up at the top? If your C-level is male dominant technically speaking there’s almost no way that you can talk about pay equity. Think about the Pareto Rule: 20% of the highest paid people will skew the data with 80% dominance. If your highest paid employees, aka your C- and executive level is male, then there’s already a pay gap created among both gender. The only way to overcome that is you have a diverse boardroom.

I think these four major factors are quite important in influencing the gender pay in our organizations and also in our society.

Promoting STEM education for the female students, giving them more opportunities in the workforce, treating them in a bias-free way during key touchpoints (hiring, promotions, transfers etc.) in their employee lifecycle will definitely helps us close this pay gap. It’s not easy, not something we can solve overnight but with a proper planning and strategy, it’s possible – and when that happens we will then talk about a developed society.

D&I in Rewards

Nowadays, HR world’s priorities are filled with Diversity and Inclusion initiatives and priorities.

I’m not surprised by this as we have seen how the world is shaken recently on this matter. My aim in this post is to share my thoughts about D&I initiative and how they can be linked to Rewards practices.

What’s D&I anyways?

Global Diversity Practice, a global consultancy firm specializing on such practices, defines it as follows:

Diversity is any dimension that can be used to differentiate groups and people from one another. In a nutshell, it’s about empowering people by respecting and appreciating what makes them different, in terms of age, gender, ethnicity, religion, disability, sexual orientation, education, and national origin.

Inclusion is an organizational effort and practices in which different groups or individuals having different backgrounds are culturally and socially accepted and welcomed, and equally treated. These differences could be self-evident, such as national origin, age, race and ethnicity, religion/belief, gender, marital status and socioeconomic status or they could be more inherent, such as educational background, training, sector experience, organizational tenure, even personality, such as introverts and extroverts.

Simply put, it’s a dimension which can explain the differences of your workforce by several groupings and respecting those differences.

How does it relate to Rewards?

In the recent years, we started seeing an accelerated effort from a lot of states to point these and how they relate to the social welfare of their population. Obviously, it’s directly correlated to the workforce and the workforce’s living.

For any member of the society, who is also a part of an organization and earns a certain level of compensation and is entitled to some benefits, it automatically impacts their involvement in the broader society.

A perfect example for such exercise is gender pay gap.

A lot of countries are concentrating on passing legislation that checks the pay equity between gender, ethnic group or race. It’s generally a reflection of the social issues that the respective country faces and tries to either increase awareness or even penalize based on the results.

Past reflections

I wrote about different pay scales for different nationalities and how this practice was interestingly common in the Middle East long time ago.

I believe this is diminished significantly over the years but it was a great example how far we came along and how much further we need to go.

You can even see the French legislation and see that one of the major indications is about getting a salary increase after returning from maternity leave. This is deliberately added to the legislation as the pay discrimination against French working moms is systemically common and creates a pay gap that is becoming harder to close as year passes by.

What can we do?

These were few examples in our field that shows how pay equity is created, and unfortunately, pretty easily.

My quick step-by-step recommendation on effective pay equity and fairness work are as follows:

1. Conduct regular checks

Obviously, everything starts by analyzing and identifying the gaps. If you don’t ask question, you will never get an answer. Therefore, asking the right questions, looking at all the different data cuts is vital.

2. Find the root cause

Once you identified the gaps, dig deep and understand the root cause. Sometimes, it’s pretty easy to tell that a pay gap is because of a wrong offer that’s extended or it’s just an outlier. Bear in mind that a compensation "life cycle" is technically a timeline and the reason could lie at any point of that timeline. Reflecting back is pretty helpful in this case.

3. Train your workforce / Create awareness

Create awareness and educate your workforce on importance of pay parity and fairness. Start from the population that has a decision-making authority in Rewards processes, but scale it to the whole workforce. Cascading this responsibility with creating awareness will help you down the line.

4. Keep the consistency on practices

Be consistent. I think this is already a crucial aspect of being a Rewards person but exceptions create outliers; outliers create inequity.

Please let me know if you’d like to see more hands-on examples on how to look into these processes or if you are looking for more details on these aspects.

Recertified by WorldatWork!

It’s that time of the year when I had to submit all my activities in the Total Rewards field to get my recertification renewal from WorldatWork.

To be honest, I was a bit skeptical to get my recertification approved. Given the pandemic and how it impacted -especially- the social aspect of collaboration with other professionals in the field, I found it hard this time to submit enough credits. However, it didn’t turn out that bad!


Up and onwards! I will share more updates as I get ready for the next one!

Tips to ace WFH

As a strong believer of working from home (WFH) during my career, I observed few habits that would make your life easier during these days.

I hope these will be helpful for you. They are based on my experience and nothing is scientifically proven unless data/source provided.

Get used to calendar & tasks being your best friends

I benefit from a GTD (Getting Things Done) approach a lot.
Creating tasks and blocking respective times in your calendar is essential. This will force you to work as you see your work calendar is full with time blocks and with a deliverable linked to them.

I would also recommend that you definitely block time and try to prioritize if you think that task is not creating any pleasure for you – if you’re less motivated to do it. This will also avoid procrastination.

If you don’t get overwhelmed with a busy calendar, I also try to squeeze my meetings in certain time blocks to avoid that “free time syndrome” — staying home and having free times in between doesn’t distract me when I’m home.

Book your time for errands

Again, calendar will be your best friend. In addition to the first point, blocking your time for errands is also important.
In an office set-up, you’d already have resources/teams for cleaning, food etc. which you don’t need to worry about. That doesn’t work at home.

I do book my time if I need to exercise during morning, or need to cook for lunch and even need to feed my cat.
For effectiveness (and obviously for your health), having those covered is essential so they are in your work calendar when WFH.

Be transparent for potential interruptions in meetings

We can share at the start of a VC meeting if we’re waiting for a grocery delivery, plumber or that you need to feed your dog in 15 minutes etc.
As I said earlier, always try to book time for such tasks in advance. Somehow, if you cannot, working from home is a bit more complicated as your home and work life are becoming integrated. We should be flexible with the daily tasks and tell our stakeholders in advance for courtesy and also efficiency.

Create your own separate workplace if possible

This is important – Even if you’d like to work from your couch – try to separate that part of your apartment as workplace and try to avoid working from places where you spend your off-time at home.

Don’t feel obliged to stay online longer/in front of your screen if you’re done for the day

One advantage of WFH is the non-existent commuting time so use it but not always for work. If you’re done for the day and you don’t need anything else to do; give that time back to your personal life.
You can use that time for work but don’t feel obliged – especially, like I said, if you’re done for the day. You need to keep yourself motivated for WFH. Staying online will not help you for that; it can add more stress. and can become a very unsustainable habit of “being always online”.

Get your meals ready in advance (even if they’re sad)

If you have the chance to cook everything in advance, this will boost your efficiency.
Personally, I realized that if I don’t do that, I started skipping meals. This is not healthy so take good care of yourself.

Have fun, be creative

At the end, companies are looking for ways to keep their employees motivated in an office space. One of the major action is that they’re trying very hard to create a place where you can feel comfortable. And guess what? — The most comfortable place for a human-being is their home. 😉

That’s why, if you try to have fun while doing your best at work, why shouldn’t you avoid that at home? It’s important that you still do VCs with your colleagues, just chatting, virtual gatherings are very fun.

If you’re a multitasker, you can even talk to your parents/friends etc. while working on some easy tasks. For example, if you’re into cycling like me, it’s extremely fun to read your e-mails while spinning on an indoor trainer.