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Facts and Fallacies of Total Rewards in the Public Sector

Jim Stoeckmann

More than a decade ago, private sector companies began practicing a management system called “Total Rewards.” Total Rewards is the deliberate integration of compensation, benefits and work-life elements to attract, motivate and retain a talented workforce. Since its introduction, the model has been widely adopted in the private sector as a best practice for maximizing an organization’s investment in employees. It works by breaking down the silos that exist within organizations’ workforce management functions resulting in employee engagement, increased productivity and lower labor costs. In spite of its success with workforces in the private sector, questions remain about its applicability in the public sector. WorldatWork, a non-profit human resources association that created the model 10 years ago, sought to gauge the model’s resonance through a series of focus groups with public-sector HR professionals. Participants included senior HR managers from the Department of Defense, Department of Homeland Security, Federal Reserve Bank, U.S. Environmental Protection Agency, U.S. House of Representatives, and U.S. Office of Personnel Management, to name a few.

Following are some of the facts and fallacies that surfaced from our discussions.

Fallacy:  Compared to the private sector, public sector organizations face a different set of challenges when it comes to hiring, retaining and motivating employees.

Fact:  Public sector organizations face similar core objectives as the private sector in attracting, motivating and retaining talent. Focus group participants were quick to identify the same essential rewards elements–compensation, benefits, work-life, performance and recognition, and development and career opportunities–in describing their view of public sector rewards programs.

And, like their private sector counterparts, they also face similar implementation challenges, such as cultures and diverse stakeholder groups, in using the Total Rewards model.

Fallacy:  While the public sector competes with the private sector for some of the same talent, it is unproductive to directly compare public and private sector pay.

Fact:  The market for critical skills is still a key driver in setting competitive pay for both public and private sector; comparisons can and will be made. However, public sector compensation seldom considers the total rewards picture, either intentionally as a bargaining strategy or innocently out of ignorance–thus, while the market should influence salaries paid in the public sector, these decisions cannot be made in isolation. Job security, benefits, work-life offerings–each have a tangible and cumulative effect on “the employment deal.” Ignoring this is foolish and tantamount to malpractice no matter the stakeholder–management, unions, Congress, etc.

Fallacy:  Public sector will never be able to compete with the pay packages offered in the private sector.

Fact:  All organizations have inherent strengths and weaknesses that influence their particular Total Rewards strategy–some strengths include the ability to offer cash, wealth-building, status, altruism, adventure, etc. These strengths generally come paired with issues such as bureaucracy, risk, negative publicity, sacrifice, safety concerns and so on. The point is that each organization is dealt a hand of cards that need to be played. And since they don’t have all the aces, government HR managers should strive to make a winning hand with the cards they have. The public sector may not have the highest salaries, but in many other areas they are peerless.

Fallacy:  Public sector will have an easier time recruiting and retaining top talent if they can increase starting salaries and guarantee annual pay raises.

Fact:  The key to success in public sector HR is less about money than it is about competent, certified practitioners who implement a fully integrated total rewards strategy using all available tools. The result is that the sum is better than its parts. In the past decade, it has become clear that to attract the best talent, an organization must offer an increasingly diverse set of employee programs and services. Among these–in addition to pay, benefits, and work-life–are performance, recognition, development and career opportunity. These programs as a whole are now understood to be the elements of a Total Rewards strategy from which an organization can craft an appropriate mix or package of reward programs that can enable their success in today’s very challenging talent markets.

Fallacy:  There are too many obstacles to the successful implementation of a total rewards system in the public sector.

Fact:  HR practitioners participating in the WorldatWork public sector focus groups saw it as a significant challenge and opportunity for many organizations. For one thing, Total Rewards program elements tend to be managed in disparate functions within public sector HR organizations, creating a barrier to full implementation. Some elements may even be managed outside of the HR function, such as work-life or telework. In addition, some of the terminology used to express and describe the Total Rewards model may be different in the public sector. After all, examples such as business strategy, variable pay, and even rewards, have their provenance in private sector organizations. Yet most participants said these terms are still applicable in public sector organizations.

A New Paradigm
The attraction, motivation and retention of talent requires more than simply pay. While there seems to be an abundance of fallacies over facts when it comes to applying the Total Rewards model in the public sector, there also appears to be agreement that a more comprehensive approach is required. The first step is simply recognizing that attraction, motivation and retention are best influenced through a holistic appreciation for the full value of the organization’s Total Reward investment in employees. For many, this perception may present a strikingly new paradigm. Yet nearly all the participants in the WorldatWork focus groups report that the Total Rewards model resonates well in the public sector environment.

While there are many varying approaches, and some are further along on the journey than others, the Total Rewards model is already being deployed by many public sector organizations. Comparing the experiences of the public and private sectors, it would appear that Total Rewards is the same in the public sector as in the private sector, just different. And that’s a fact!

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About Jim Stoeckmann

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One Response to Facts and Fallacies of Total Rewards in the Public Sector

  1. 4WHLYOuDqghOhs Reply

    November 17, 2012 at 7:57 am

    382233 130024What a lovely weblog. I will surely be back. Please maintain writing! 199955

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