Compensation has been in the news A LOT lately. From executive compensation to pay cuts, we are surrounded by an air of uncertainty when it comes to the future of pay structures.
Prince William County’s decision to implement pay-for-performance for teachers is part of a larger discussion about how to improve student achievement. Yet, the outcome of this initiative will be worth watching. The intention is to put the program in place for 2010-2011 and evaluate the results to see if there is value in continuing it.
Executive pay and bonuses have come under fire; a point demonstrated by the following articles.
Boards to Execs: You’re Not Worth It
Gluttons at the gate
Exec pay: Sharing the pain?
Lurking behind this attention are questions about how deep the pay cuts will go and how long they will last. Some semblance of an answer can be found in a recent Watson Wyatt survey of “HR executives at 141 U.S.-based companies.” The survey results show that “Salary reductions jumped from 7 percent in February to 21 percent in April.” Furthermore, the responses indicate that “many employers are anticipating the eventual recovery and expect to reduce their cost-cutting measures over the next 12 months.”
Nothing, however, is certain.
David Wentworth of the Institute for Corporate Productivity cites an Industrial and Labor Relations Review study from the nineties which “looked at data from 5,736 Danish firms from 1992 to 1997 and compared wage increase dispersion to net value added (revenue less purchases) per employee. As the spread between raises for low performers and high performers widened, the value added went down.”
What will the future bring?
Leonard Holmes, reader in management at Roehampton University suggests, “Now is not the time for simplistic responses to analyses based on limited study; it is time to undertake sound research, challenge sacred cows and develop sustainable theory and evidence to underpin what we deem best practice.”
What are your thoughts on these compensation-related issues?
References:
Birnbaum, Michael. “Performance Pay Being Considered for Pr. William Teachers.” The Washington Post [www.washingtonpost.com]. May 10, 2009.
Covel, Simona. “Entrepreneurs Cut Own Pay to Stay Alive.” The Wall Street Journal [www.online.wsj.com]. April 23, 2009.
Goodman, Peter S. “Free Fall’s Over, but Where Are We Landing?” The New York Times [www.nytimes.com]. May 9, 2009.
Gray, John. "Exec Pay: Sharing the pain?" Canadian Business Online [www.canadianbusiness.com]. March 10, 2009.
Holmes, Leonard. “A challenge for reward specialists.” People Management [www.peoplemanagement.co.uk]. April 23, 2009.
Hood, Duncan. “Gluttons at the gate.” Macleans [www2.macleans.ca]. May 5, 2009.
McCann, David. “Boards to Execs: You’re Not Worth It.” CFO [www.cfo.com]. May 6, 2009.
Watson Wyatt Worldwide. “Effect of the Economic Crisis on HR Programs.” [www.watsonwyatt.com]. April 2009.
Wentworth, David. “Are you getting what you’re paying for?” Institute for Corporate Productivity, Productivity Blog [www.i4cp.com/productivity-blog]. April 6, 2009.
