The Routledge Companion to Reward Management

Stephen J. Perkins

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351865852
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The Routledge Companion to Reward Management provides a prestige reference work and a state-of-the-art compilation, mapping out contemporary developments and debates on rewarding people in employment, and how they relate to business, corporate governance and management.

Reward management stands at the interdisciplinary interface between economics, industrial relations and HRM, industrial psychology and organisational sociology, and increasingly corporate governance incorporating debates around equity and fairness in and around the employment relationship and wider capital-labour relations. In recent years, trade union decline and widening differentials between those employed at the top of organisations have generated critical commentary in the popular media which can negatively impact on social cohesion.

Theoretically underpinned but practically oriented, this Companion will synthesise these trends and controversies around issues while tracing conceptual and empirical provenance, currency and future prospects. It will be an invaluable resource for student and researchers in reward management, corporate governance, management and HRM seeking convenient access to an area which is highly complex and controversial in application.

PART II

Contemporary themes in reward management

The second segment of the volume casts an eye across the various issues – frequently controversial and contested – to the fore in contemporary reward management thinking, policy development and practice.

Greater transparency around employee reward determination – between levels of the workforce and in relation to demographic characteristics – has become increasingly prominent due to public and, in turn, regulatory pressure on organizational leaderships. Alexandra Arnold and Ingrid Fulmer argue for widening the lens to inform scrutiny around managing pay, illustrating the multidimensionality of transparency as a construct and the multiple levels at which it operates. Drawing on organizational justice theory, an assessment is provided of ways to evaluate transparency – in terms of processes, interpersonal communication and comparative outcomes.

Another question that has attracted considerable notice within current corporate governance debates has been the extent to which managerial actions are socially responsible and enable or inhibit sustainable organizational evolution. Ewa Beck-Krala and her colleagues offer an analytical focus on socially responsible reward programmes, exploring, in turn, the implications of both salaries and incentive payment plans for corporate social responsibility and sustainability, and how rewards may be designed to encourage employees to recognise their interdependency with multiple stakeholders in organizational life and beyond, through socially responsible and environmentally sustainable agency.

Evaluating investment in reward management practices is a topic of interest to all organizations, with a focus on securing the effective application of scarce resources. Dow Scott and Ewa Beck-Krala set out a proposed, multidimensional, framework with which reward programmes may be evaluated systematically; each element of the framework offers employers the means by which to assemble and review valuable information about the effects on the major stakeholders in their reward management activities.

The gender pay gap is a focus of significant popular and regulatory concern, intertwined with a far-reaching set of issues that have surfaced illustrating the use and abuse of power in the workplace. Using their recent research findings, Duncan Brown and Catherine Rickard analyse the stubborn persistence of gender pay gaps some four decades after legislation outlawing discrimination between men and women employed to undertake work of equal value. They compare and contrast action taken over the years by employers and government and argue that for a corrective outcome to be sustainable, a more integrated approach needs to be taken by multiple stakeholders over a significant time period.

Jonathan Chapman uses his direct experience as well as results from a programme of rigorous research to build and specify a more unified basis for theorizing the reward mix, i.e., the various elements that make up what employers offer to the financial services sector workforce in return for their contribution to desired business outcomes. Shifting attention from concentrating primarily on fixed and variable pay, the relative importance of the various components in ‘the mix’ is weighed enabling a more systematic basis for scrutiny of reward management practices in this sector, with potential wider application across the economy.

Executive remuneration is a contentious area within both academic and popular reward management literature. Zara Whysall and Almuth McDowall adopt a psychological perspective to assess reward–performance associations applicable to business leaders and an apparent disconnect with more nuanced behaviours necessary to secure sustainable organizations as evaluated by stakeholders beyond exclusively those holding financial shares. Informed by their recent research, questions are posed and addressed as to an appropriate direction for research, theory building and its practical application if the judgement that current levels of executive reward are unsubstantiated is to be reversed by more ‘fit-for-purpose’ corporate governance stipulations.

Clive Wright engages with an emergent understanding about the diverse nature of organizational workforce members, and scope to engage them, locating reward management as part of wider human capital strategies. In turn, he holds out the prospect of enhanced sustainable performance at all levels and across employee configurations internationally. His call is for corporate leaders to get better at listening to, and acting on, what employees themselves say motivates them in the broadest sense within the effort–reward bargain. Putting current and emerging technology to good use as a means of tapping ‘employee voice’. Failure to respond to this managerial challenge implies willingness to continue in effect to waste what for most organizations is the largest single controllable investment.

The digital economy is a significant factor impacting on organizations and those who work in them, and Matti Vartiainen summarizes observable trends as these interact with choices faced in approaching contemporary reward management. New demands are evident on managers to respond to as yet still unspecified implications for the design of work roles at the human–digital interface, understanding the capabilities necessary to support organizational effectiveness under competitive market conditions where ‘first-movers’ may secure advantages over the less technologically developed, while balancing these with generational shifts in employee expectations around autonomous working and socially just reward determination.

Deploying employees to work as expatriates has long been a staple of work for HR specialists in traditional multinational organizations. In recent years, competitive pressures and changes to the composition of what counts as transnational operations and overseas work deployment, as well as growing pressures leading traditional MNEs to offer less generous terms to international assignees, have changed the landscape of expatriate reward management. Susan Shortland and Stephen J. Perkins apply equalizing differences theory to discuss the heterogeneity of expatriation types and questions around continued validity of the ‘expat package’, taking into account questions of organizational justice.

Despite the pressures on expatriate reward management, Nicholas R. Prince and J. Bruce Prince point to the increasing number of multinational employers as well as labour force mobility under conditions of economic globalization. With these changes, they argue, innovation is required to ways of offering incentives to diverse individuals and groups making up the global workforce to secure their willing cooperation with managerial priorities. Not only is a research agenda sketched, but ideas are also put forward as to how businesses may successfully use incentive elements within reward management investments in ways relevant to the composition and expectations of globally mobile working populations.

Marion Festing and Michael Tekieli review considerations influencing the balance multinational employers strike between standardized (i.e., irrespective of geography) and localized reward management practices. Their analysis goes further than firm-external and firm-internal considerations featuring in the published literature, surfacing ways in which the two thematic aspects may be theorized as interacting with one other when units of analysis are adjusted to encompass wider sets of reward practices and target employee groups within organizational role hierarchies. The resultant call is to pay attention to multi-level approaches, including psychological, social power and decision-making to enhance insights to be reached.

Drawing reflexively on extended participant observation across a number of case settings, Romain Daste tackles a question with which contemporary organizations seem to struggle: the effective valuation of work and, by extension, those employed to perform it. His conclusion draws attention to the interplay of espoused managerial intentions to conduct their reward management by the application of objective criteria and enacted practice coloured by political considerations – which may result in simply muddling along, with the consequent inefficiency comparing aims to outcomes this entails.

The rhetoric–reality gap observable in some contemporary reward management situations is explored further by Marie Bailey, with illustrations from the transport sector, standing at the interface between public and private sector employment. Further illustrating the risk of a reward management and wider HRM ‘dark side’ prevailing, evidence is presented of ways in which through ignoring or overlooking the possibilities inherent in taking an evidence-based approach to policy making and its practical implementation employee engagement with managerial intentions is put at risk, with the outcome that anticipated outcomes are sacrificed. Lessons are also drawn for academics if they are to secure positive impact from their theory-building and research endeavours, necessitating greater empathy with practitioners.

Reward management as risk management is delineated by Jonathan Trevor. Rewarding for performance is at the core of narratives describing contemporary managerial aspirations. But for the unwary, or for managements unwilling to embrace its full connotations as a form of social interaction around the psychological contract reflected in the employment relationship, more harm than good may be expected for those in search of organizational effectiveness. Based on empirical findings that control for industry effects and embrace a range of employee levels, a proposal is advanced for employers to shift away from the dominant unitarist logic of mainstream reward management, fundamentally to revise what they say and what they do to recognise the roles employees individually and in groups play in value creation.

9

PAY TRANSPARENCY

Alexandra Arnold and Ingrid S. Fulmer

Introduction

Pay transparency, the information that employees have about the pay of other employees in an organization (Colella et al. 2007), is currently a hot topic among scholars, professionals, employers, employees, politicians and the wider public. The volume of articles on pay transparency (and its opposite, pay secrecy) in newspapers, professional magazines and top scholarly journals has increased in the last few years, and professional HR associations such as the Chartered Institute of Personnel and Development (CIPD) in the United Kingdom or WorldatWork in the United States have started to address pay transparency issues in their compensation survey reports (e.g., CIPD 2015; WorldatWork 2016). The movement within organizations to adopt policies that promote greater transparency has been triggered to some extent by the increasing amount of pay information easily accessible to workers on the Internet. Online wage calculators together with platforms such as Glassdoor.com, Payscale.com or Salary.com, where employees share their own pay data publicly, are enjoying increasing popularity with workers. In addition, politicians have started to participate in discussions about pay transparency as a potential tool to reduce the gender pay gap.

Despite the growing interest, different parties still have mixed opinions about the effects of pay transparency (Colella et al. 2007). Supporters of pay transparency argue that it will increase employees’ performance (Bamberger and Belogolovsky 2010) while reducing the gender and racial pay gap (Castilla 2015). Opponents of pay transparency argue that disclosing everyone’s salary could cause envy and conflicts among employees (Bamberger and Belogolovsky 2017) and would equalize pay and thereby generate weak incentives for high performers and hard-to-find talent (Bartol and Martin 1989).

However, pay transparency is a multidimensional construct that can take many different forms, operate at many different levels, and be influenced by different types of organizational policies. In order to understand how organizational pay transparency policies affect employees and organizations, we first define organizational pay transparency and look at data describing the prevalence of different aspects of pay transparency. We then look at governmental regulations that might impact pay transparency policies, and follow this with a section where we consider the effects of pay transparency on employees and organizations. We will conclude with recommendations for practitioners, policy makers and scholars.

Definition and occurrence of organizational pay transparency

Broadly speaking, pay transparency policies refer to the extent to which an organization voluntarily discloses pay-related information to its employees and allows employees to discuss pay-related information with other employees inside the organization (Marasi and Bennett 2016). More specifically, we distinguish among three different aspects of pay transparency policies:

1 Pay outcome transparency (disclosure of pay amount)

2 Pay process transparency (disclosure of information on how pay is determined)

3 Pay communication restriction

In the following we will discuss each of these aspects in more detail.

Pay outcome transparency

Pay outcome transparency policies refer to the extent to which an organization voluntarily discloses information about the amount of pay to its employees. Such pay information can be released in many different forms, ranging from exact individual pay information to aggregated pay information (e.g., pay bands, ranges, averages) to minimal to no pay information. Companies like Buffer and Whole Foods Market and many state and local governments in the United States, as well as Alternative Bank in Switzerland, for example, share individual-level pay information with all their employees. However, companies that are fully transparent about pay outcome are the exception. In a recent survey by WorldatWork, a US-based association for compensation practitioners, only about 4% of responding organizations provide actual pay levels for all employees (WorldatWork 2016). In addition, some 37% indicated that they report base salary range for that employee’s pay grade and 15% report ranges for all pay grades and jobs. For example, some government agencies publish aggregated pay information in the form of pay bands for different ranks and experience levels. In comparison, nearly half of the organizations surveyed in the WorldatWork survey indicate that they only disclose minimal pay-related information to their employees (WorldatWork 2016).

In addition, according to a recent CIPD survey with 715 organizations across private, public and third sectors in the United Kingdom, the amount of disclosed individual pay outcome differs among pay components (CIPD 2017). Organizations are the most likely to display exact individual respectively aggregated pay information for benefits (70%), followed by information on pay increase (59%), base pay (54%) and team-level variable pay (47%). The least amount of exact either individual or aggregated pay information (41%) is displayed for indiv...

Table of contents

• Cover
• Half-title Page
• Title Page
• Copyright
• Contents
• Figures
• Tables
• Acknowledgements
• I Conceptualizing and theorizing reward management
• II Contemporary themes in reward management
• III Reward management in practice
• 30 Reward management in the public services
• 31 Reward management and organizational citizenship behaviours in UK banks
• 32 Changing patterns of pay systems in China
• 33 Exploring the strategies underpinning Marriott’s rewards practices in the emerging Chinese hotel industry
• 34 Managing small enterprises in China’s decentralized organizations
• 35 Reward management at Huawei, China’s leading global enterprise
• 36 Managing employee rewards in Mexico
• 37 Rewards in European transition states
• 38 Reward Management in small-medium knowledge-intensive firms
• 39 Poor remuneration management and its consequences in the Ethiopian civil service
• 40 The story of Indian remuneration
• Index