Compensation & Benefits Review

In response to Securities and Exchange Commission requirements, most companies have eliminated the more obvious types of corporate exposure to imprudent risk taking linked to pay, such as megagrants of stock options, performance incentives based entirely on top-line growth or significant “guaranteed” severance packages. Risk assessments can dive deeper, though, to uncover risks or opportunities from pay plans that are not obvious on the surface. The risks include financial burdens placed on the company from the incentive plan, operational processes that fail to surface and mitigate errors in judgment or calculation of payments, plans that damage the company’s reputation and plans that have the potential to cause a loss of critical talent. In uncovering risks, opportunities to improve plan design and effectiveness are often revealed, as well.

As the scrutiny placed on executive compensation increases, so too must companies continue to be diligent in designing and implementing their compensation arrangements. They must be competitive with peers so they can attract and retain their talent but must continue to maximize shareholder value and manage third party perceptions of their pay practices. Companies must be prepared by asking the right questions and being ready to respond to criticism, especially if they engage in poor pay practices as determined by shareholder advisory firms.

As the Family Medical Review Act (FMLA) approaches its 20th year, employers continue to face a costly and burdensome policy that often yields confusing outcomes in the courtroom. For example, in disagreement with the Department of Labor’s understanding of FMLA, the courts have determined that a period of unemployment may sometimes be ignored when determining eligibility. Likewise, in certain situations, time spent at a previous and different employer may also count toward FMLA eligibility. With 52% of employees using FMLA and the cost of defense amounting to $80,000 per claim, employers will greatly benefit from developing an FMLA strategy, possibly to include punishment.

The effect of compensation on employee performance, satisfaction and organizational commitment is hard to overstate. Designing an effective compensation structure may be a daunting task, in particular with respect of finding a balance between direct and indirect compensation. The paper discusses the challenges and offers best practices for incorporating non-monetary benefits in a compensation package.

Globalization is causing companies to rethink their business strategy. In support, global talent management strategies are changing as well. Companies are focused on emerging markets to provide a growing percentage of their revenues. They are learning that they need to hire local talent that understands all the nuances of local business instead of using traditional long-term expatriates. This article looks at the history of talent management globally, the global “war for talent” in the “new normal” and a number of talent alternatives for companies to choose from based on each operation’s specific need.

The pension fund deficit is the most common financial problem in the countries that have established old-age insurance systems. For China, as a country whose population and economic structure are in transition, this problem is particularly prominent. There is a huge gap in pension funds in China. This article analyses the scale and causes of the gap, reviews the major government funding measures and evaluates the effect of policy implementation.

Flexible reward arrangements (e.g., flexible benefit plans) have been around for a rather important period of time. Although some authors have examined the antecedents and consequences of adopting such plans from a theoretical perspective, empirical studies are rather scarce. Furthermore, there is a need to apply a strategic rewards perspective to flexible reward plans in order to help firms to move from “best practice” toward “best fit.” This article interprets the results of a survey held in Belgium and the Netherlands regarding the prevalence and perceived outcomes of adopting flexible reward plans within a model of strategic alignment of reward management.

The importance of pay to employees has been a controversial topic among compensation professionals for at least the past 40 years. It has received considerable attention from the best minds in academia and from respected HR consulting firms. In recent years, consultants’ survey research studies have contributed substantially to defining pay’s role in attracting, retaining and engaging certain employees. In some cases, their findings have contradicted the beliefs of scholars, which are rooted in the distant past. Further study is needed to establish the best method for learning how important pay is to employees and to determine the effect pay has on their motivation to work.