Company Culture

Compensation: The Gap in Communicating Company Culture

By Sarah AlexanderJune 29, 2017

The catchphrase among companies these days is “corporate culture.” The Harvard Business Review recently recorded a 90-minute strategy meeting of Fortune-500 company leaders and found that they brought up the word “culture” a whopping 27 times. While this might seem extreme, it makes sense given the extent to which employees have made clear that having a fantastic corporate culture is not just an option. It is the expectation. In fact, many employees now rank culture and their work’s purpose as equally if not more important than salary.

However, must salary and culture be two separate entities? What if salary and benefits were viewed as part and parcel of corporate culture? Can compensation plans actually reflect a company’s organizational culture? Absolutely.

Compensation Indicates Corporate Values

Compensation provides a direct indication of a company’s values. If a company proclaims that people are its greatest asset, compensation is one way to put the company’s proclamation to the test. If the organization pays employees in a lower percentile of their talent market’s value, it will undermine that tenet of its culture.

Furthermore, if an organization values innovation, creating thinking, collaboration, and other behavioral components, then raises and bonuses should revolve around performance in these areas versus narrowly defined, results-driven metrics. For example, there are companies that place 50% or more weight on living their organizational values while making compensation and reward decisions. In these companies, employees take values very seriously, and with good reason.

With this in mind, consider what is important to your company. Is it winning at all costs? Or fostering a culture of teamwork and trust? Whatever your priorities, focus on a clear, concise, transparent compensation philosophy that rewards performance in the appropriate areas. Molly Graham found during her time as Manager of Culture & Employment Branding at Facebook that a compensation structure which is “relatively simple, clearly communicated, and fair made a huge difference.” As Graham observed, “You can’t be transparent if you’re not paying fair, and if you are, there’s no reason to not be transparent.” Openly communicating your compensation philosophy, component by component, will assure employees that their organization is seeking fairness and deserves their trust.

The Compensation Disconnect

In its most recent Compensation Best Practices Report, TLNT discovered that while 44% of companies think their employees are fairly paid, only 20% of employees feel the same. Along these lines, 64% of companies reported that their employees felt appreciated at work, while only 45% of employees agree.

This is a striking disconnect, and one that indicates many companies are overlooking the cultural messages that compensation policies can send. Learn from these statistics: consider publishing your compensation strategy so that it is readily available and easily understood by all. Pairing this with the use of an instant feedback tool and encouraging executive leaders to actively engage with employees’ questions will ensure that people feel like their voice is heard.

Over time, it will ultimately enable your company to arrive upon a broad reward system that reflects its people’s—and their collective culture’s—values.

Sarah Alexander

Sarah Alexander

Author & Contributor

About the Author

Sarah is an elite triathlete and independent strategy consultant with an MBA from Chicago Booth. She is passionate about empowering others to achieve excellence.

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