The Missing Dimension of Total Rewards: Time

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Why this format

The DisruptHR format gives a speaker five minutes and twenty slides that advance automatically every fifteen seconds. There is no room to hedge, no room to qualify, and no way to slow down when an argument gets uncomfortable. That makes it a good test. An idea that only survives with its caveats attached is not yet an idea. It is a paper.

This is the compressed version of three research papers and a book. Everything it asserts is defended at length elsewhere on this site.

Transcript

What is an hour of your life worth?

Not what does your employer pay you for an hour. What is the hour itself worth? Because those are two very different questions.

Every employment relationship begins with a transaction we rarely describe honestly. An employee gives an employer something they can never get back. Their time. In exchange, we give them money. We built an enormous profession around making that exchange work. I spent my career inside it.

We benchmark. We design. We build. We call the whole thing Total Rewards. And we have become incredibly sophisticated at answering one question: how much should we pay someone? But I think we have largely ignored another. When is that compensation supposed to create value?

Think about your own compensation. Some of it pays for dinner tonight. Some becomes a down payment five years from now. Some pays for your children's education in fifteen years. And some of it supports a version of you who will not exist for forty years.

These are all dollars. But they are not doing the same job.

Because compensation does not just have an amount. It has a relationship with time. And that creates a problem.

Imagine someone who earned fifty thousand dollars in 1990. And someone doing the same job today for fifty thousand dollars. On the payroll system, those numbers are identical.

In the real world, they obviously are not. You might have noticed money does not go as far as it used to. Time happened to the money.

And yet compensation still speaks in nominal terms. Your salary went up three percent. Your bonus went up five percent. Your pension is worth four hundred thousand dollars. They tell us how many dollars someone has. Not what happened to the time they traded for them.

That distinction becomes enormous over a working life. Two percent inflation is not a crisis. It is the target. At two percent, the value of a person's work halves in thirty-five years. At three percent, still inside the target band, twenty-three years.

The Delivery Assumption is the belief that the employer's responsibility ends the minute the paycheque lands. It is a relic from an economic environment of which three pillars have not survived. Stable inflation. People who stayed. A pension that did the carrying.

All three are gone. The assumption stayed.

I have been working on an idea I call Temporal Compensation Theory. The proposition is simple. Compensation should be evaluated not only by what it is worth when it is paid, but by how well it carries the value of an employee's time to when they need it.

Every instrument you have moves value between different points in a life. And the question changes. Not: are we paying people competitively? But: what happens to the value of their work after we pay them?

We already know how to do this. For the five people at the top, we debate vesting horizons and payout timing for hours. For the five thousand beneath them, we benchmark the number. Rigorous about time for five. Silent for five thousand.

Every dollar we pay does one of four jobs. It funds today. It protects. It aligns. Or it carries value forward. Three of those have a mature science. The fourth lost its client when the pension died.

The fourth job is the one we stopped designing for. What happens to purchasing power as years become decades?

So the employee has to solve it alone. Here is the part we do not say out loud. The safe option no longer preserves value. Standing still requires taking risk. We never asked them to be investors. The design made them one.

That is not an investment question. It is a compensation question. And there is an obvious objection. Are we now responsible for forty years of markets and personal decisions?

No. You are accountable for the architecture you designed. Not for the outcome of the journey.

Because the most important thing an employee gives an organization is not their productivity. It is not their expertise. It is not even their labour. It is their time.

Money can be earned again. Companies can be rebuilt. Careers can change. But nobody gets Tuesday afternoon back.

So maybe the next evolution of Total Rewards is not about paying people more. Maybe it begins with a different question. We built a benefit for every job but one.

What would a benefit designed to carry value through time look like?

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The one number in the talk, and how it is calculated

The pension figure is the only statistic on stage, so it is worth showing the working. Both ends use the same denominator, which is defined benefit members as a share of paid private-sector workers. That consistency is what makes the comparison honest.

• 1990: 25.4 percent. 2,422,000 private-sector defined benefit members. Statistics Canada, Pension Plans in Canada, reproduced in the Labour Market and Income Data Guide.
• Today: under 10 percent. 1,315,000 private-sector defined benefit members against roughly 13.9 million paid private-sector workers, which is about 9.4 percent.

"Under ten percent" is deliberately conservative. It holds for any denominator above 13.15 million, and Canada's private-sector employee base is comfortably above that. A corroborating series, if it is ever wanted: Statistics Canada shows private-sector defined benefit coverage at 26 percent in 1991 falling to 11 percent by 2013, and it has kept falling.

A tempting shorthand that this work avoids is "one in twelve." That implies 8.3 percent, which requires a denominator near 15.8 million, and you only reach that by adding the self-employed to the private-sector count. It is a defensible denominator on its own terms, but it is not the one the 25.4 percent uses, and mixing the two overstates the decline.

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The full argument, with citations and the case against, is in the three papers. The vocabulary the talk uses is defined in the glossary.