In Star Trek the Prime Directive is to not interfere with the internal development of other civilizations.
What’s the prime directive in total rewards?
In my view, it’s to protect the integrity of the total rewards system. In other words, there has to be a systematic, rational way to make compensation decisions.
Sometimes need to violate the total rewards prime directive
In Star Trek circumstances arose that forced the Enterprise starship crew to violate the Prime Directive. Total rewards professionals face that same dilemma.
Herein lies one of the central paradoxes of employee rewards: the need to unstintingly defend a principle while at the same time being willing to violate it when conditions demand.
I once heard a manager say:
“I have the authority to spend $100 000 to upgrade a machine, but I can’t authorize the $10 000 needed to retain the person who runs the machine. HR is idiotic.”
The fundamental difference is that if you spend $10 000 on a new machine, the other machines don’t get mad.
Maintaining the integrity of your employee compensation system
In contrast, all the salaries in an organization are loosely coupled, and moving one salary up by 10 percent creates a tension that tends to pull other salaries up by that same amount.
HR is in a tough spot because you cannot say that making an exception will cause these increases, just that it creates unhealthy pressures. At the same time HR does need to consider whether this is a time to bend the rules. One can often find an argument for re-evaluating a job so it sits in a higher grade or offering some other exception—just this once.
I knew an organization that had a “person to hold” category where some employees, for special reasons, had higher salaries than the system normally allowed. When I asked how many people were a “person to hold” the answer was: “almost everyone”. The employee compensation system had broken down, pay levels were out of control, and fairness was out the window.
The first few exceptions to the rules must have made sense on their own—just that once—but they were the “cracks in the dam” that ended up bringing down the whole employee compensation system.
Defending your total rewards system with flexibility
So HR needs to defend the total rewards system, without being so inflexible that bad pay decisions are made. The judgment component of all reward decisions does give HR some wiggle room.
One can go through the job evaluation process and after some debate, decide a job is in grade 7; everyone may have agreed it wasn’t a grade 6 or 9 but recognized it could have been an 8. Under pressure to find a way to pay a key individual more, HR knows that grading the job at level 8 is not outrageous.
I describe job size as a cloud. You can often say that one cloud is definitely bigger than another, but jobs like clouds don’t have well defined boundaries, and in the end the decision about whether a job is a grade 7 or 8 is just a judgment call.
Yet if managers know that they can get a job pushed up a grade just by applying a little pressure, then they will break the pay system. HR has to defend the choices made by the job evaluation process knowing full well that, at the margins, it is not a precise science anymore. So employee compensation is scientific, but not entirely; and we cannot bend, except for sometimes.
Would Captain Kirk make a good compensation manager?
It takes courage to be a Starship captain and it takes courage to be a compensation manager.
You must obey the Prime Directive and protect the total rewards system from managers who seek a short term fix for a particular case. You must also know that there are times when disobeying the Directive is the right thing to do.
There is no formulaic solution available. Just keep your eye on the long-term good of the organization and always frame your arguments in those terms. Good luck!
*Star Trek image sourced via tos.trekcore.com.