Learn the best approach for HR to address employee complaints after disclosure of executive compensation. Detailed explanation for SHRM Senior Certified Professional (SHRM-SCP) Exam.
Table of Contents
Question
Which approach can best address complaints received from the workforce regarding a recent disclosure of executive compensation?
Answer
Develop and distribute individualized total rewards statements for all employees. The most efficient way to mitigate a sense of unfairness within the compensation system is to help employees understand the value of their own total rewards and compensation. Educating employees on their direct and indirect compensation and benefits will shift the focus away from executive salaries to their personal total rewards. Prohibiting employees from discussing compensation, even unauthorized, may exacerbate the tension and having the CEO issue an apology and statement about the disclosure does nothing to address the employees’ concerns.
Explanation
The best approach to address complaints from employees about a recent disclosure of executive compensation is to develop and distribute individualized total rewards statements for all employees.
Here’s why this is the most effective solution:
- It helps employees understand the full value of their own compensation packages, including direct pay like salary/wages as well as indirect compensation such as health insurance, retirement benefits, PTO, and other perks. Seeing their total rewards holistically puts their compensation in context.
- Focusing employees on their personal compensation shifts attention away from executive pay and potential feelings of inequity. It reframes their perspective to evaluate the fairness of their own pay rather than comparing it to executives.
- Proactively communicating to employees demonstrates transparency and shows the company wants them to be fully informed about their compensation. This builds trust.
- Individualized statements are more impactful than general communications about pay. Seeing the total value of their specific rewards package is eye-opening for many employees.
The other options are less ideal:
- Prohibiting discussion of compensation, even if unauthorized, violates labor laws and could worsen employee frustration.
- A generic apology from the CEO doesn’t address the underlying concerns and won’t change opinions.
- Doing nothing allows complaints to fester and grow.
In summary, individual total rewards statements are the best damage control approach after disclosure of executive pay because they educate employees, reframe the conversation to their personal compensation, demonstrate transparency, and communicate the full value of their pay and benefits. This SHRM-SCP scenario illustrates the importance of strategic employee communication by HR.
SHRM Senior Certified Professional (SHRM-SCP) certification exam practice question and answer (Q&A) dump with detail explanation and reference available free, helpful to pass the SHRM-SCP exam and earn SHRM-SCP certification.