By Claudine Kapel
The eHealth Ontario compensation saga is a tale of promises made and rescinded, that highlights how even well-intentioned pay decisions can have unintended consequences if not handled with care.
And while this particular tale unfolded at a government agency, the themes are relevant to anyone involved in making compensation decisions.
The abbreviated story is that hundreds of employees at eHealth, an agency set up to manage Ontario’s electronic medical records, were promised merit increases and bonuses in recognition of the progress made in turning around the troubled organization. But the announcement spurred critics to argue that such compensation awards were inappropriate at a time when the provincial government has pledged a two-year wage freeze for public-sector workers.
In response to the outcry, eHealth rescinded its promise of pay increases and bonuses, no doubt to the great chagrin of its employees.
The story highlights the turmoil that business leaders can create when they fail to follow organizational directives.
Notwithstanding arguments that the wage freeze is not backed by enabling legislation, and has been successfully challenged through arbitration, there was still an expectation that all government agencies, including eHealth, would abide by the province’s commitment to a wage freeze.
So regardless of how well-intentioned the plan for pay increases and bonuses may have been, leaders who do not toe the line when it comes to following organizational directives typically get reined in quickly. This is because most organizations recognize that inconsistency of practice erodes the meaning and application of governing rules and protocols, opening the door to ambiguity, weakened decision making, leadership credibility issues, and concerns about fairness.
Despite the strong media attention on the eHealth story, the reality is that the private sector is no stranger to departures from protocols or organizational directives. Here too, we find leaders who stray from policies and procedures – or who don’t get the appropriate approval before making commitments – including in the arena of compensation.
How many times have you been told by a line manager that he or she has already spoken with or made a promise to an employee that had not properly vetted and approved in advance?
So what can human resources professionals do to help leaders speak with one voice in matters of rewards management?
Some common sense practices include:
- Ensuring there are clear and well-documented policies that address how compensation programs are to be managed to support consistency in pay administration;
- Ensuring leaders are clear about the approval process for pay recommendations and how pay decisions are made;
- Providing leaders with training that covers both how compensation programs operate and the role of leaders in managing pay;
- Helping leaders understand the potential consequences of inconsistent pay decisions, including the potential impact on employee trust and morale and the potential erosion of regulatory compliance;
- Reviewing pay recommendations to ensure consistency within and across departments or business units; and
- Holding leaders accountable for sound pay administration.
As for eHealth, the saga is far from over. Assuming the decision remains firm to rescind the merit increases and bonuses, the organization will still have to contend with the employee reaction to their loss.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.