Out On a Limb with 'Heavy' Compensation Predictions

This article was written in 1994. Some of our guesses have begun to happen; we're still waiting for the others.

We've been spending a lot of time, lately, speaking on the meeting-conference-workshop-seminar circuit. Our long list of topics includes such topics as organizational assessment and change, business communication, employee motivation, compensation strategy and HR survival tactics. Curiously, the odds-on favorite among program chairpersons is "Compensation Trends and Forecasts."

While we are content to leave soothsaying to 'professional psychics,' our predictions have been remarkably accurate. Eschewing smoke and mirrors, we 'simply' analyze economic developments, governmental actions and the psychosocial milieu, and take a few logical leaps (Kentucky windage).

This is where we "see" compensation systems heading in the near to distant future:

  1. Pay system design will emphasize knowledge capital (organizations will be viewed as bastions of mind work). This does not mean that every organization will move to competency- based pay. On the contrary, companies that are process-oriented will utilize pay for competency, and many companies, for which the system is not naturally suited, will return to (or stay with) more traditional, job-based and factor-based approaches. A greater variety of specifically tailored approaches will prevail.
  2. Health care system reforms will significantly impact the design of benefits programs, cutting out much of the bureaucratic jumble.
  3. Executive compensation equity [fairness] will be redefined within a global labor market.
  4. The pay pyramid will continue to flatten, reflecting: delayered, nonbureaucratic, flexible organizations with truly empowered employees.
  5. The current employee empowerment/participation/ownership trend will lead to employee involvement in compensation planning which is likely to generate more innovative plan designs.
  6. Compensation surveys will be conducted on-line, providing real-time data, through an electronic survey network.
  7. Decentralized line managers will input pay decisions on their laptop computer for immediate accessibility by other members of management.
  8. The role of "Director of Compensation" will change from nay-sayer and gatekeeper to change agent.
  9. The compensation field will merge with the field of organization strategy and development.