Many organizations have a policy prohibiting their employees from discussing salaries with each other. We can safely assume that employees disregard plenty company policies on a regular basis. Sneaking in a few minutes late. Checking Facebook every once in a while – or maybe all the time. You might think salary discussions are another example of employees ignoring their bosses, but that might not be the case. A recent survey from CareerBuilder suggests that men and women have starkly different views of gender inequality in the workplace – especially when it comes to income.

Here’s what the survey found:

From the women’s perspective:
-38 percent feel they earn less than their male counterparts
-39 percent believe men have more opportunities to advance their career
-36 percent believe men receive more recognition for accomplishments
-35 percent believe their decision not to rub elbows with upper management (while the men are doing it) is the reason for the pay and advancement disparity
-22 percent cited favoritism toward men as the reason for the income and advancement differences

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Recognize This: Cash rewards go unnoticed, leaving no impression on employees of your appreciation for their efforts.

To my American friends and colleagues: Did you notice the extra money in your paycheck? According to an article in last week’s Boston Globe newspaper, most didn’t.

“‘What?’ said the professor waiting for a train at South Station. ‘I get extra money?’ asked the mom with her son. ‘I didn’t realize that,’ said the guy getting his shoes shined. Three weeks after a payroll tax cut took effect, few people are noticing the extra money — $40 a week for some, $10 to $30 a week for most — that Congress put in their paychecks.”

As I’ve written many times before, cash rewards do nothing to reinforce the messages you’re trying to send. Employees often don’t even notice it in their paychecks. As one client told us after surveying their 300,000+ employees, of those that even realized they’d received a cash reward, 29% used it to pay bills and 18% didn’t remember how it was spent. Is that what you were hoping to achieve?

Or, as one Globoforce colleague of mine recently related:

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Recognize This: How you reward employees is a key indicator of underlying company culture.

We’re often asked why we don’t encourage the use of cash as a reward in strategic employee recognition program. The simple answer is: cash = compensation. Rewards must use a different “currency” than cash or employees will lump your “rewards” into their paycheck, guaranteeing it will become an expectation.

A better question to understand is: What kind of company culture do you want? A culture of appreciation or of compensation?

Your culture is built on the interactions and conversations that happen every moment of every day between your employees. Building that culture begins by encouraging recognition between and by all employees, yes, but it also builds on the rewards employees can enjoy that links the behaviors and actions they were recognized for to the memorable rewards they choose.

When that reward is cash, you can’t – as our client Symantec explained – have a conversation with colleagues, “Oh, I got $500 dollars.”

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Recognize This: Compensation and bonus are two different things, like oil and water. Stop trying to mix them together.

UK press reported last month that the banks find themselves between a rock and a hard place. On one side, the country is operating under deep austerity measures, banks are being accused of not lending to businesses enough, and London banks plan on paying out £7 billion in bonuses (or maybe they’ll reduce it to £4 billion). On the other side, if the banks agree with each other to cap bonuses (which are seen as a critical recruiting/retention tool), then they could be prosecuted for competitive collusion.

How’d the banks find themselves in this mess? Simple. Like on Wall Street in the US and elsewhere in the world, they confuse bonus with compensation. One banker is quoted in the article:

“There’s no chance that the big US investment banks will follow our example, which means that business and good people could leave London for New York or elsewhere if we’re seen to be paying less than the market rate.”

Did you catch that? “Paying” less than the market rate. Bonuses are not pay. Bonuses are given for achieving stretch goals, going beyond what is expected. Bonuses are not base compensation. They should never be an expectation.

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It’s nearly that time of year so many in compensation and benefits have come to dread – end of year bonuses and the resulting litany of: “How come she got the same bonus I did? Clearly I worked harder.” Or “This isn’t as much bonus as last year and I did so much more.”

Bonuses, when used appropriately, can play an important role in a Total Rewards package. The challenge with them tends to arise when bonuses become an entitlement. For example, one article (requires membership) I read this week outlined how to structure a “money pool” approach to ensure your top performers get more of bonus budget. Another article argued the benefits of “paying bonuses” to those who would be hard-to-replace and not just top performers.

What’s wrong with these scenarios? Let me count the ways:

1) You’re adding so much complexity to what should be – and can be – so simple. If you create a strategic recognition program, that allows anyone to recognize anyone else at any time for actions or behaviors you’ve pre-established as deserving of recognition, then naturally your top performers are going to receive a larger share of the “recognition” pie.

2) You’re separating the moment/action/performance deserving of recognition from the recognition itself. People need to be recognized soon after the action or behavior deserving of recognition or they will lose any connection to the moment. Think of this as the puppy approach. Annual or quarterly bonuses can then reinforce trends in performance or achievement of long-term goals as they are intended to do as incentives.

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Treatment versus Perception

I got sucked into a conversation. It was around an associates belief that ‘companies’ don’t treat people well. This kind of made me think and wonder. Wonder because it came out of the blue. It also made me wonder because it was such a broad and sweeping statement with no real specifics. Being a representative of OE and HR I treaded lightly. I swallowed and asked “Why do you feel that way?” Fearfully waiting for the answer and trying not to rebut or question their response.

The Statement

“I haven’t received a raise in over 3 yrs.” They started to go on a little deeper into the subject. Knowing we were in public and others could view the conversation differently I made the comment “Let’s get into the details a little later.” Another person came in and said, “Only 3 in 8 years… and why am I still there…?”

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Last month, Laura Schroeder wrote a great post on Compensation Café on tailored rewards and the realization that one size doesn’t fit all. As Laura points out: “Various research shows that people are motivated by different things at different times, depending on a variety of personal and demographic factors.”

Pop over and read Laura’s full post. She offers five solid tips for moving towards tailored rewards. It’s her last statement of the post that got me laughing, however:

“I also don’t recommend tie pins.”

I laugh because I’ve heard that more than a few times from companies we consult with: “But we’ve ALWAYS given tie/lapel pins. It’s a critical part of our program!” As I’ve written about before, ask just about any employee who ever received one, and they’ll fumble to remember which junk drawer the pin ended up in.

But the important lesson here is that any discussion of total rewards is irrelevant if you don’t also discuss the meaningfulness of those rewards. “The way we’ve always done it” may mean something to the 30-year employee in Marketing, but absolutely nothing to the 1-year GenY rockstar in R&D. And vice versa. BOTH perspectives are equally important, and even that is vastly simplifying — it’s not easy to juggle the “perceived motivators” of a 10 person small business, much less in a 30,000 employee multi-national corporation.

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A recent survey from Kelly Services found that more than half of all Americans surveyed believe they would be more productive if they had greater interest in the companies that employ them, through benefits such as profit sharing. In previous posts, we’ve established the many benefits pay for performance programs provide when they are done well, but this survey helps to clarify who pay for performance matters to and why.

The survey found 25 percent of workers are currently in an arrangement where some of their pay is tied to performance targets. Gen X (aged 30-47) employees are much more likely to be receiving performance-based pay than Gen Y (aged 18-29) or those in the Baby Boomer generation (aged 48-65). Men are also more frequently in performance pay plans than women.

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I’m a fan of Ann Bares’ Compensation Force blog. She writes cleanly and clearly on what are often complex topics. She’s called herself a “spreadsheet jockey,” but she is uniquely talented at taking the information out of a spreadsheet and bringing to light the most pressing issues to those not immersed in employee compensation matters.

Last month, she broke down the challenge of merit pay. Click over and you’ll see at a quick glance why she concludes:

“There we have it, for what it’s worth. All I can say is, no wonder we’re looking beyond merit pay, and even cash rewards, to drive performance.”

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Irrational. Some days, does it seem like that’s the best word to describe the workplace? I tend to like Dan Ariely’s research on irrationality. Initial research

showed, “In eight of the nine tasks, the promise of a bigger bonus actually significantly decreased people’s performance.”

Paul Hebert recently reviewed Ariely’s latest book, The Upside of Irrationality on his i2i blog http://www.i2i-align.com/2010/06/the-upside-of-irrationality-if-there-is-one.html. Paul highlighted this very interesting twist on the impact of cash bonuses:

“In the experiment they told the participants that they already earned the 5 month bonus – and gave them the money, but told them they would have to return a portion based on their performance. If they maintained a certain level of performance they could keep the 5 months pay – but if they fell below they would start to “lose” their money.

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Meaning and purpose. It’s critical to employee engagement and productivity and it’s also what everyone wants in their work. Last week, the informal (highly un-scientific) poll on the GloboBlog showed that 53% of people are happiest at work when they know their work has contributed to a meaningful goal. Another 40% are happiest when someone appreciates their work – another form of showing meaning. (It’s also interesting to note that not a single person said they’re happiest at work when they get paid.)

Critical to meaning and purpose is having a sense of alignment — understanding your company’s objectives and values so well, you know the work you do contributes to those objectives and the values are in agreement with your own personal ones.

So what’s the problem? Ann Bares wrote about it well on her Compensation Force blog, based on recent Hewitt research.

“The large majority (73%) indicate that goals are somewhat aligned, that corporate goals are communicated and then left to local managers to translate. So for most employees, it all rests on effective coaching and direction from the local manager. … And how’s that working for us?”

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When it comes to news about American Muslims in the workplace, the focus is often centered on issues of discrimination, harassment, or misunderstandings related to Muslims’ religious beliefs and practices. Very little seems to be written about how to create an environment of inclusion beyond basic workplace accommodation.

For employers, the importance of understanding the laws specific to religious accommodation and being in compliance with those guidelines goes without saying. But viewing such compliance as simply a means to mitigate the risk of potential charges of discriminatory practices is rather short-sighted in today’s global environment. What’s needed is a deeper understanding of the multi-faith workforce, which can become a valuable strategy in attracting and retaining diverse talent.

With an estimated six to 10 million Muslims living in the U.S., it is likely that you employ, manage, or work with a Muslim. It’s even more likely that your Muslim co-workers are not taking part in your company’s 401(k) opportunities, which often make up a considerable portion of an employee’s total rewards package. What to do (or not do) about employer investment opportunities is one of the most common challenges and sources of frustration facing Muslims working in the U.S. and other Western countries.

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As a blogger, you meet many interesting people and make several acquaintances through the blogosphere that you might not otherwise. One such relationship for me is with Doug Shaw, founder of What Goes Around Limited. Note the link when you visit his site – Stop doing dumb things to customers. That’s Doug’s attitude. We all know what we SHOULD be doing… so just step up and do it already! I like that attitude. It reminds me of a word I learned from an American colleague recently – it shows some “moxie.”

In a post last week, Doug went on a tear after hearing about a plan to restore short term financial incentives (bonuses) after all the mess they caused in this recession. Doug says it better than I can:

“OK, so having seen first-hand the value destroying, anti-collaborative behaviour that short term financial incentives drive, we’re gonna do it all over again. With a twist. We’ll let these sweet bonus carrots dangle a little further away. That way folks will have to focus even harder on the carrot, and from there I put it to you a stronger focus on the value destroying behaviour necessary to bag the carrot will emerge. Not happy? Furious more like!

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Last week I had the pleasure of participating in my first BlogTalk Radio show. Hosted by Paul Hebert of i2i, I joined a panel of fellow Compensation Café bloggers to discuss “Compensation & Rewards: What’s the Difference?”

I truly enjoyed the experience. It’s not often that you get people from the compensation side of the table and those from recognition and incentives on the same conversation. It quickly became apparent that those versed in compensation (the “spreadsheet jockeys” as Ann Bares referred to herself and fellow compensation colleagues) and those focused on recognition and incentives rarely collaborate.

Why is this? We dove into a couple of main reasons:

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Pay for performance seems to be much in the news and HR trade publications lately. The general take-away from all of the articles is that pay for performance doesn’t work (or at least doesn’t work as well as anticipated or desired) but everyone does it anyway (to some degree) because everyone else is doing it.

A May article from Talent Management magazine tells us:

“The reason the pay-for-performance concept has been so disappointing is because the human aspect of motivating desired behaviors is not as cut and dried as the pay-for-performance approach generally implies. Most organizations simply don’t know how to successfully define the performance they want, so organizations end up paying for failure rather than for performance.”

Paying for failure rather than performance – that’s what happens when you fail to clearly define, in an achievable and measurable (not subjective) way, what it is you expect people to accomplish. A June article (“Channeling Malcolm Gladwell on Pay Systems,” requires subscription log-in) from Workspan magazine cited the research on this:

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