A primary challenge for all leaders is sustaining or enhancing business results. To add value to the business, rewards must be part of the business solution. Today that is often not the case. Only when businesses achieve goals and attract the best people with the top skill and talent that can be translated into real performance can all the elements of total rewards be retained. So the key issue is making pay for performance real—many talk about this but it has not yet become prevailing practice. Companies need to either find ways to improve performance and relate increasing total rewards costs to results or change what they offer.
Think about other major problems that exist. It is hard to open a newspaper and not find an article about company benefit plans. Health-care costs have increased so dramatically that for many companies it is the fastest-rising expense on the income statement, rising in many cases more quickly than sales or profits. This is leading companies to change how they approach health care. Almost all employees are feeling the pinch of higher premiums, larger deductibles and bigger co-pays or coinsurance payments. Consumer-driven health plans are increasing in number as companies hope that an ounce of health-care consumerism will yield a pound of reduced health-care expense.

Retirement plans are also under fire. Companies are discovering they can no longer afford their traditional defined benefit pension plans. In some industries—automobile manufacturers, airlines and steel producers—these obligations threaten the financial viability of many large employers. As these plans are closed to new entrants or frozen for existing employees, they are being replaced with smaller, but more affordable, retirement and/or savings plans.

The workplace is getting more complicated. Most companies have employees from four generations in the same workplace. Recent generational diversity studies have shown that these generational groups are not homogeneous. What they expect to put into work and what they expect to receive in exchange are not the same. The “good ole” cookie-cutter approach to total rewards leaves many of these folks dissatisfied, some unmotivated. This is not a prescription for success in an increasingly competitive world.

The good news is this situation is entirely fixable. Most total rewards systems do not have to be scrapped, they have simply become ineffective. Using an automobile metaphor, they are in need of a major tune-up. This tune-up needs to reflect the new realities of work now and in the future. It needs to reflect what is in the hearts and minds of current and future workers. It needs to reflect the changing expectations of relevant external constituents. In short, it needs fresh thinking.

High-Performance Pay: Fast Forward to Business Success, by Pat Zingheim and Jay Schuster, discusses how total rewards systems play a unique and important role in creating high-performance organizations. However, the authors see many companies’ total rewards practices are stuck following conventional wisdom, often leading to less-than-high-performance pay solutions. They further believe that many of these solutions are no longer economically viable and lead to many of the gut-wrenching downsizing, outsourcing and offshoring actions that have come in the face of a business or industry downturn. Zingheim and Schuster have presented 18 chapters of ideas about how to remake a total rewards system into a high-performance system, how to properly link the total rewards system to the operational side of the business to drive results, and how to create “win-win” solutions for companies and their employees.


High-Performance Pay: Fast Forward to Business Success, by Patricia K. Zingheim and Jay R. Schuster - published January 2007, WorldatWork.  For more information or to purchase a copy, please visit WorldatWork.