5 Hidden Cost of Inaccurate Compensation

Learn from These High Profile Compensation Communication Mistakes

compensation communication

Compensation management can be tough for any organization; the stakes are high, and missteps can have both immediate and long term costs. Sometimes, even the most well-known brands get it wrong. Here are two examples of horrible HR mistakes that affected employees’ compensation – and what you should do to avoid them:

Urban Outfitters Takes the “Thanks” out of Thanksgiving

October 2015 – Ahead of the 2015 holiday season, retail giant Urban Outfitters strategized on how to best serve customers’ holiday shopping needs. Unfortunately, the solution they came up with was at the expense of employees. Urban Outfitters sent a company-wide email asking for “volunteers” to come in on weekends during the month of October to work six hour shifts in the company’s fulfillment center – without pay. The company emphasized that it would pay only for lunch and for transportation to its rural Pennsylvania-based fulfillment center.

The Problem: This blunder is two-fold; aside from asking employees to work multiple six-hour shifts without pay, the company failed to realize how this request would devalue the perceived value of employees’ time. These workers already work hard for their employer; to then be asked to “pitch in” and do more without any sort of recognition, particularly in the form of some sort of compensation, is sure to demotivate employees and make them ask if they should even stay with a company that doesn’t value their hard work. In fact, 32% of people change jobs due to dissatisfaction over how their previous employers failed to acknowledge individual contributions.

What You Should Take Away from This: The breakdown here comes first in communication, then in execution. A company that claims to value its employees’ time and efforts, and then asks them to donate a significant amount of both of those things without any sort of recognition, is a breakdown in communication. Like all compensation communications, make sure what you’re asking of employees and what they will receive is clear. Even if there is no monetary reward, make sure that the company takes the time to recognize the efforts and sacrifices made by employees.   

Walmart Fires a Man Over $2 Worth of Trash

November 2015 – An East Greenbush, New York Walmart store fired an employee who collected $2 worth of cans and bottles left behind in a shopping cart in the store’s parking lot and redeeming them at a redemption machine inside of the Walmart store. Walmart considered the redemption of these cans to be theft, and asked the employee to sign a written statement about the incident, despite the fact he did not have his reading glasses and could not read the document. He was also denied a copy of the statement after he was terminated.

The Problem: Whether or not you consider the termination of an employee over $2 worth of trash in a parking lot preposterous, the real problem is that there was a complete lack of clarity on the part of the employee – and the company did nothing to communicate the nature of the disciplinary action, and even withheld communication that was asked for. This sort of opaqueness is unacceptable for organizations.  

What You Should Take Away from This: Clear communication is key. In this specific case, clear communication about acceptable employee behavior could have prevented this entire incident. Even after the incident occurred, Walmart should have taken the time to fully discuss the situation and why the employee is facing termination. Always be clear about codes of behavior, about compensation policies, and especially take the time to explain to employees why certain decisions are being made, particularly bout compensation and about disciplinary actions.

The right compensation management technology can help you more effectively communicate to employees, managers, and stakeholders about complex compensation decisions. But how do you go about choosing the right solution for your company? Use our compensation management technology buyer’s guide to help you navigate the process.  

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