- Paying for potential vs. performance scores. King's Hawaiian's chief people officer encouraged total reward pros at WorldatWork's Total Rewards '23 Conference to think holistically when it comes to employee rewards strategies.
- Adopting "aloha values." Driving the sweet bread company's business approach is a model with five pillars, including success, value, health, potential and capability. Rewarding the future value employees can bring to the organization — and attaching pay to that capability — is a key emphasis of the company's compensation philosophy.
- Engaging change management. The new system requires training managers to provide consistent feedback and ensuring employees understand that future value creation will drive their pay, along with prior work achievement.
Not long after Amy Hirsh Robinson took over as chief people officer at King’s Hawaiian, she worked to move the organization away from its reliance on annual performance reviews to make compensation decisions.
Robinson, one of the keynote speakers at WorldatWork’s Total Rewards’23 Conference in San Diego on Monday, implored her total rewards team to think differently about how to incentivize and reward employees at the sweet bread company. The team ultimately landed on a holistic model that pays employees for their potential and capabilities rather than performance review scores that are tied to merit increases.
“It’s a projection for the value you can bring to the organization in the future,” Robinson said. “What drives our business approach is what we believe will create future value and pay should be attached to that capability.”
Robinson noted that a typical performance review scoring system has a range of 1 to 5, with 3 being adequate performance and a 4 or 5 representing significant or exceptional performance. However, the merit pay associated with those scores don’t necessarily reflect the gap in value to the organization that is being created, she argued.
“What’s the incentive for a high performer,” she asks, “if they’re only receiving a 1% or 2% difference in merit pay than their peers who have done what’s expected?”
Refocusing Rewards on Future Value Creation
Robinson emphasized that this system of rewards at King’s Hawaiian is new and has required a strong change management process. It involves training managers on how to provide consistent feedback to their people and ensuring employees understand that future value creation is what drives their pay, although prior work is still rewarded and recognized.
“The performance piece is where there is some confusion,” Robinson said. “Rewards and recognition are being built and we have short-term programs for those to reward prior performance. But long-term thinking is around paying for capabilities based on our model.”
King’s Hawaiian’s full employee value proposition is based around “aloha values” implemented by founder Robert Taira. Thus, Robinson and her team built a model with pillars that represent a flower on a customary Hawaii lei. The foundational elements of the model include:
Robinson said the organization places a large emphasis on employee health and wellness to help people improve their physical, mental, financial, social and professional health to be their best at work.
“We believe we won’t get the best out of our employees if they are dealing with their own or family health concerns, so we provide benefits that align with that belief,” she said.
Robinson left a crowded room of attendees at the San Diego Convention Center with a final thought to bring to their own organizations. Many executives view HR and rewards as compliance based and administrative, she said, so to have a seat at the table, the focus must also be on value creation.
“Total rewards plays a key role in building the employee experience and driving value for the organization,” she said. “So, it’s important to have a compensation and rewards philosophy that coincides with that.”
Editor’s Note: Additional Content
For more information and resources related to this article see the pages below, which offer quick access to all WorldatWork content on these topics: