Pay Program Participation & Transparency: a Voice or a Vote?

I have had some great conversations with a few of my clients recently as part of ongoing efforts to "open up" their compensation programs - giving employees and managers opportunity for input to program development and working to better inform and educate them on program purpose, intent and mechanics.

A funny thing happens in the course of moving these compensation programs to (hopefully) a better place.  More involved and informed employees are more likely to voice concerns, question and even challenge elements of the program.  That's right.  Which, to the HR or reward professional who has invested so much time and energy (and sometimes even political capital) in making the programs better and more open, can feel like taking two steps back after taking three steps forward.  But it's not.  This is simply part of the new paradigm that the organization has entered.  Transparent and participative pay programs can be messier and more complicated to manage than secret, dictatorially designed programs.  But they are ultimately better for it.

However.

I also believe that, in these circumstances, there is an important message that must be sent and repeated about who is in charge at the end of the day.  About who has a voice and who has the vote.  And the message is this:  The organization and its governing bodies (management and/or the Board, typically) retain the right and the responsibility to set employee compensation.  Period. 

Now, they do everyone - including themselves - a tremendous favor if they choose to discharge this responsibility by providing well-considered opportunities for employee/manager input and if they seek to make and keep pay programs appropriately transparent.  But this doesn't change the fact that they hold the right to make the final decisions on the programs and policies by which people are paid.

We occasionally need to remind our most strident and outspoken employees of this fact, even while encouraging their (constructively expressed) ideas and feedback.

That's my stand.  I posted some time back about pay democracy, after reading a Wall Street Journal article featuring a company that had allegedly arrived at that place.  I have to confess that I just don't see it.  Others may have a different point of view.  What say you?

Comments

[Andres]

Spot-on post, Ann.

Companies with the gumption to embrace transpareny may have to weather more complex employee issues, but they will ultimately be better places to work because of it (as long as everyone knows where the decision-buck stops).

[Ann Bares]

Thanks, Andres. I couldn't say it better. I know the kind of place that I would want to work in (if I wasn't a consultant and was actually employable).

[Wally Bock]

Excellent post, Ann. Most of the people who write and talk about "workplace democracy" are actually using the wrong terminology. In a democracy, individuals have a vote that counts toward resolving an issue. That's not what we have in companies. We can have a participative workplace, but that means the individuals have a say, but not a vote.

[Ann Bares]

Great point, Wally. We do use the term democracy - incorrectly and too often - to describe what is actually participation. By not being completely clear and right in our use of words here, we confuse and mislead everyone as to who has what ultimate role and right. Which sure doesn't help us in our efforts to produce great workplaces.

Thanks for checking in!