Strategic Thinking and Executive Alignment for Rewards Leaders

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Welcome to Aeqium's Compensation Playbook Series! 🎙️

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Today’s episode features a dynamic conversation with Jess Yuen, an advisor, executive coach, and long-time Aeqium collaborator. With a wealth of experience in people operations, Jess shares invaluable insights into navigating strategic thinking and executive alignment for total rewards leaders.

This episode covers:

- Defining what it means to be strategic in total rewards leadership
- Insights into how rewards leaders can better align with company goals
- Evolving the role of TR leaders to include financial strategy and cross-functional collaboration
- Building trust with executives and key stakeholders
- Managing change effectively in legacy processes
- Practical approaches to planning, alignment, and stakeholder communication

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Transcript:

Peter: Hey, everyone. Welcome back to the latest episode of Aeqium's Compensation Playbooks. Today, we are really fortunate to have Jess Yuen, who is an advisor and executive coach and has been an advisor to us here at Aeqium for a number of years.

So someone whose opinions I appreciate a lot, and I'm really excited to have a chance to chat. So thanks for being with us today, Jess.

Jess: Yeah, excited to be here, Peter. Always fun to chat.

Peter: For sure. So today we are talking about strategic thinking and getting aligned with executives for total rewards leaders.

And I think that really there's been a narrative over the past, maybe every year since the pandemic, about HR in general becoming more strategic.

We hear that, of course, from total rewards leaders too. We'd love to get your perspective on how you've seen rewards leaders being asked to be more strategic and what that has really looked like over the last couple of years.

Jess: Yeah, well, one thing I like to step back and do is come back to, like, what does it mean to be strategic before I get into how I've seen total rewards leaders being more strategic.

Because I think it's used oftentimes when people are like at a certain point in their career, "You just need to be more strategic."

And I remember at one point somebody saying, "Hey, they keep telling me this, but what does it actually mean?" If you go back to the etymology of the word, it comes back from like war times.

It was generals needing to be more strategic, which was essentially: What's going on? Assess the situations. Think about all the variables, and then move forward.

So sometimes people say, "Hey, strategy and planning are different," but I actually think that it is a lot about planning, but being aware of all the variables that can impact your plan and how you might adjust based off of it.

And so when I think about strategic leaders, I think about those who are able to think forward and kind of see around the corners.

See those future kind of edge cases that they might need to plan for. And it’s also about being able to see things from a different perspective, from that slightly higher viewpoint so that you can see the entire sort of playing field.

With TR leaders, I'm seeing that the world has been changing. We're seeing more global companies earlier in their evolution.

We're seeing more transparency because of transparency laws. We're seeing more collaboration of total rewards leaders with other parts of the organization, both within the people teams as well as across companies.

And so I think the ways that I've seen TR leaders stepping up, one is more involvement in people's strategy and just coming up with that broader roadmap and being a sounding board.

Both for the people leader who's heading the organization, as well as for their peers and being able to say, "Hey, here are things that from my perspective or vantage point that I think we need to be incorporating into that broader strategy."

Or how we're looking at sort of that twelve-month, eighteen-month, twenty-four-month roadmap.

I think the other place that's interesting to see more TR leaders stepping into the role is for many years in public companies, TR leaders were involved in preparing for the compensation committees.

And now I’m seeing more and more TR leaders actually being the ones who are kind of the face of that messaging too. Where the chief people officer might actually bring in the TR leader to do the presenting and develop direct relationships with the board.

And I think that has been a really nice way to kind of tighten the relationship and that step of the strategic role of the TR leader.

I'm also saying, interestingly, I was talking to somebody just the other week who's a leader, and their chief people officer had said, "Hey, in light of all of the budget constraints that we've had and wanting to make our budgets last longer and further, you've done an incredible job with the biggest line item in our budget, which is people and the compensation spend.

The next biggest line item for us: buildings and facilities. And we have so much trust in you. We want you to take that on."

Jess: And that's not a natural necessary stretch, but it was one where it just goes to show you the value that the TR leader was bringing from the financial perspective. She was the first person that was thought of when they said, "Hey, we need somebody to be taking this on. Who do we trust?" And it was actually the CFO who had advocated for that expansion.

Another example of seeing the expansion of scope and that more strategic lens is oftentimes you'll see TR leaders and recruiting connected because of wanting to put offers out that are within bands and are very aligned with what we want long-term once candidates become employees.

Usually, TR is consulted when those offers are being put together. I've actually seen use cases where we see the reverse—where it's actually recruiting being consulted, and TR actually owns the picking of, "Hey, here's what the salary should be in the base, bonus, equity numbers."

And so I think that has kind of been another interesting expansion of the role. And so it'll be fun to see evolution over time as we see the world continue to change, as these trends continue to evolve, of how total rewards leaders' roles evolve as well with that.

Peter: Totally. Yeah, I mean, so many parts of that resonate. One quick one: I know we frequently, much more frequently now, hear that the reason somebody's slammed is they have a board meeting coming up. So definitely think that comp committee piece would resonate with a few folks listening.

But yeah, that concept of, "Hey, we're an advisor to not only the head of people, but also other executives in the org," resonates a lot. And we're an advisor to them on the plan and where we're going in the future.

I know you were in the position of heading people organizations at a number of great companies. In your experience, what did you see from leaders—particularly in the rewards function, but I imagine it's a little bit more generic question—who are really good at doing that, who are good at partnering with you as an executive or partnering with your peers as executives?

Jess: Yeah, well, I think some of the most effective leaders that know how to partner well are the ones who make it less about, "Hey, I have my agenda and the things I need," and more about, "Hey, what do you need? What are your goals? What are you trying to achieve?" And wanting to make sure that they're both addressing what's going to be top of mind and high priority for them at the same time as, "Okay, well, here's stuff that we should also consider that maybe impacts both of our worlds."

So I think that moving it from being more self- or team-oriented to other-oriented is a really powerful criterion or characteristic to have as an effective leader who's collaborating.

I mean, I think the other thing when I think about total rewards leaders in general, they have this really tricky balance to have between being consistent and wanting to have a system that's going to be fair and equitable, but at the same time is flexible.

Because there's a lot of situations, use cases, new things that are coming up in our world where they need to figure out, "Okay, how do we allow for this to happen within the system that we've created?"

And so I think those who have both that view towards consistency or like first-principles thinking and can combine that with the flexibility needed end up being kind of like the best total rewards leaders.

They often have a systems thinking, too, of like, "If I do this thing, here's how it's going to impact the other pieces of this puzzle that we're trying to solve at the same time."

Maybe one more thing that I would add is—and I think the unicorn total rewards leader for me is like those things plus they're also analytical, they're also great communicators, they're really thoughtful.

And I think that's an ask—that's a tall order for anybody. And I think that is being asked of more and more of our leaders to both be analytical, operational, strategic, but can execute, but can also communicate really well.

But you know, knows how to do all of the analysis in depth. And I think we're all being stretched in these ways.

And knowing yourself, knowing your strengths, I think is the last piece of what I'll say. If you're thinking about, you know, "What do I need to be to be a great total rewards leader?" is like, know yourself and where your strengths are.

Where's your interest to develop the things that maybe you're not as strong at? And then where do you supplement, and how do you supplement? Is that with like, if you have a team, the people on your team? Is it with the people you collaborate with? Is it something else?

I mean, now we have all these incredible AI tools, like how much is at our disposal. And of course, tools like the compensation management like Aeqium provides is an incredible step up on some of these pieces that allow total rewards leaders to be so much more operational and consistent in the way that we do things.

Peter: That unicorn narrative resonates so much for me because it’s like, actually, when you were mentioning planning for spaces, as well as people, and how the finance leader just happened to rely on the total rewards leader, it almost makes sense to me.

Because so many of the folks that we talk to are coming from a finance background into total rewards, and they’re often spreadsheet wizards and highly analytical and highly quantitative.

And I imagine for a lot of folks, that does come with maybe they’re not quite as good at this stakeholder alignment piece that we’re talking about because they’ve spent a lot of time being deeply quantitative. And so there’s so much leverage to stepping up into that piece.

Jess: I mean, one thing I’ll add on stakeholder alignment, and I’m glad you brought that up because I think it is one of the trickiest parts of being like a really effective total rewards leader. And sometimes people will use the word like, "You should be collaborative."

And I think in some ways, yes, there is collaboration. But I think that the trick of being really effective is actually that corralling of like, what does everybody think? Where’s the through-line between all of it, getting everybody on the same page, moving them all forward?

That is really, really where the nuance comes in. And what’s so hard about the role is many times we have leaders who are coming from other organizations, some have grown up in the company.

And so they have different philosophies of what they think is right or how something should be handled. And so the ability to align stakeholders, do a bit of negotiation with them, influencing with them, coming back to first principles, like that weaving together of all those skills, that’s where the magic is.

Peter: Totally. And I mean, we had a really good conversation on this recently where a lot of total rewards leaders are coming into a position where maybe they’re the first true head of or VP of total rewards.

And there are processes established at the company that they’re at that came from somebody who didn’t have a background in that. And so there’s often a, "Hey, I want to make changes because I’ve seen how this works elsewhere and how it should probably work here."

And that can be a challenge. What are some of the things that you’ve seen be effective in those leaders being able to come in and affect change and get stakeholders on board with the changes they’re trying to make?

Jess: Yeah. I mean, how tricky, right? And I feel like this is almost for any leader. You come in and you see what’s going on, and you’re like, "Oh my gosh, we need to fix some stuff."

And, you know, the classic sort of ninety days or a hundred days, you’ll usually see or get advice that’s like, "Just observe." And it’s the hardest thing to do, to just observe and take things in.

But I do think it is actually really important to understand, like, why do things work the way they do? It’s helpful to question why we do the way things do because sometimes it’s just for silly reasons, or we just happened to do it, and it was meant to be an experiment, but we never changed it after we did it the first time.

Jess: But I was just talking to a leader a few weeks ago, and she had inherited total rewards, hadn’t done it before, but she had been at the organization to see it, but not up close. And so her question was, "Do I—like, I see this really big opportunity. Our employees are asking for a ton more transparency around this process."

And we started to peel back the onion, and this is a fun part of my job—we peel back the onion and find out what’s underneath. And in her case, I was like, "Well, what needs to be communicated? What could be better communicated about how this process works?"

So, like, tell me about how it works today. And it essentially was all of the executive team gets into a room, and they don’t have a formula, they don’t have criteria, and they decide what everybody’s increases are going to be.

And it’s been this way forever. And so I was like, "Well, what could we communicate? Because it just seems like what people want is to understand why and how this process is done. And if we just say, ‘Hey, it’s a black box and some magic happens and it just comes out with no rhyme or reason,’ I’m not sure it’s going to actually do the thing that you’re hoping it’s going to do by communicating more."

Jess: And so what we ended up talking about was, "Hey, the next cycle is actually happening pretty soon, within the next handful of weeks. Even though it feels like a car crash happening in slow motion to let it go again without changing anything, in this case—and this is not always the right thing to do—but in this case, it felt like the best option was for her to be in the driver’s seat but take the same path."

And be able to collect the information firsthand of what was going well and not going well, in addition to knowing the communication could be better.

And to also ask all the key stakeholders, so for those executives that were getting into the room and making the decisions, did they see a problem with this process? Because how much of this is, "I need to convince them that something needs to change?" How much of this is, "I need to just put out a plan and change something?"

Jess: I think the first step I would say in change management is understand the problem. That often involves collecting the data, collecting the evidence, collecting firsthand experience when you can, or at least talking to a lot of people who are experiencing it firsthand.

And then once you have that, then figuring out, "Okay, what’s the timing to be able to shift it?" And this is one I know we’ve talked about before—do you do a big bang all at once, or take it slowly?

Jess: And maybe an example here is in my early days at Gusto. I came in, and they would do compensation increases on the day of your anniversary, which at the time could be any day because you could get onboarded on Monday, Tuesday, Wednesday, Thursday, or Friday.

And so we were constantly onboarding people. We were constantly doing raises. And I had a decision to make: Do I try to shift to what’s sort of like tried and true—you move to once or twice a year—or take it a bit slower?

And in this case, what I understood was our founders cared really deeply about how personal of an opportunity this was to recognize somebody on their anniversary, to talk about all the good that they had done and the impact they were having.

And they tried to make it as personal as possible. They actually had this really elaborate spreadsheet, and they tried to make it formulaic and all this stuff.

Jess: But, you know, for any professional who’s done this for a while, you know there’s all sorts of things that this introduces. Besides the administrative overhead, there are probably like half a dozen, if not more, biases that come into play when you do this this way.

How do you budget for it? It’s the wild, wild west. And so it’s like, how do you plan for it? How do you make sure that it’s going to be super fair and equitable? How do you make sure it’s not just recency bias type of elements coming into play?

But they wouldn’t have been open to like, "Okay, let’s move it to once a year," because it totally obliterates that personalization that they were aiming for.

Jess: So instead, we moved really slowly with them. We said, "Okay, well, instead of any day of the week, let’s move to once a week." And from once a week, we moved to once a month.

And from once a month, it got easier to then convince them to move to quarterly. And then we moved to like the twice a year. But that’s a process that sometimes feels really uncomfortable for those in charge of the process because you’re like, "Oh my gosh, how many times do we have to change to get to the final result?"

But at the same time, you know, it’s not a race. We’re just trying to do right by the organization and the culture that needs to be taken care of there.

Jess: And so I happen to give two examples as we’re talking about how fast to move. In these cases, we moved a little bit slower than might be our anticipated need. But there are lots of cases where it’s like, actually, the appetite is there.

We do have a leadership team who’s like all in. "Yes, we so feel the pain. Please try anything different." And you can do it in that one sort of big jump. But I think knowing and understanding the environment you’re operating in is the most important step.

Peter: Well, and that’s—I mean, there is the pace at which you roll out change to get people comfortable with it. But rewinding to your first point, and maybe even a theme of kind of all the answers you have for us so far, it’s just really understanding the people that you’re trying to build this alignment with.

Where they’re coming from, why they may like the current process or not like the current process, just understanding resonates so much.

Jess: Yeah, and I think sometimes we almost as humans just want to kind of skip that step where we go and ask because we think we know because we’ve had conversations or meetings or we’ve partially talked about it.

But sometimes that explicit ask of, "What do you expect? What do you need? What’s going right? What’s frustrating you?" Like explicitly asking for it.

And then hearing, like if you go on a listening tour or something like that, hearing it all sort of collectively, the themes become much, much clearer of like, "Okay, here’s where there’s demand for it. Here’s where there’s going to be resistance. Here are edge cases that maybe weren’t on my radar that I really need to plan for at this point in time. Here are the edge cases that we can sort of punt and move down the road."

Jess: So I think that part of, and this is where we talked about that communication skill being really important—I think the leaders who understand the importance of that communication being two-way is really, really powerful.

Peter: Oh, go ahead.

Jess: I was just like, a thing that I thought when you’re saying that is, you know, in any kind of job, any sort of position, sometimes we fall into these patterns if it’s a little bit more of an adversarial thing or a tension or an us-versus-them.

We see it in total rewards sometimes with almost, you know, total rewards versus managers: "Hey, we’re trying to keep the managers in line. We’re trying to make sure they follow the policies."

And what I love about what you’re saying here is, hey, if we’re viewing it more as a team effort, we’re trying to understand why those folks aren’t aligned with something that we’re doing, there’s a better chance that we’re going to be able to move the organization toward where we think it should be.

Jess: Yeah, and I think sometimes I love that you’re saying that because sometimes there’s this almost fear that if I ask and I hear something that I can’t say yes to, or that I’m such a nice person, I’m just going to say yes to whatever they ask me to, that I’ll get myself into trouble.

So I’m just not even going to ask in the first place because then I don’t need to deal with that issue. And the thing is, we want to hear it, and we want to acknowledge it too.

Sometimes, like, "Hey, what I’m hearing you ask me for is that you want to be able to pay your employees top of market. And the thing about being consistent and being a good communicator, it comes back to total rewards leaders having that honest conversation of, I hear what you’re saying. I hear you want to be able to pay top of market. Given where our business is right now, here’s how we’ve decided on budgets."

Jess: And this is what we’re able to do. And we’re keeping it consistent because we want to be fair and equitable. Whatever that reasoning is, I think coming back and just facing it head-on, just saying, and here’s what we’re doing about it: "You’ve asked for this, either yes, we can do it, no, we can’t, or we’ll consider it and we’ll think about it."

Like that clarity of response really helps your leadership get on the same page as where you’re at too. Even when it’s hard, even when it’s like, "I’m so sorry, I can’t give this to you. Even if I wanted to, I really can’t," you know?

But coming with the openness to share that hard conversation with them and also potentially learn something you didn’t know from why they’re insisting on a particular thing to you, I feel like is just such an important skill.

Peter: One more question that I kind of wanted to ask you, which is actually rewinding back to your definition of being more strategic. You mentioned that it’s really about forward planning and kind of getting out of the day-to-day and thinking about how we affect change over a longer period of time.

We’re at a time of year where I know a lot of folks in the total rewards space start to feel very challenged to do something like that as they prepare for end-of-year comp planning.

It becomes a lot more about the day-to-day operations. What advice would you have for someone in that position who kind of feels like they just have to focus on the day-to-day? So how do they ever get to be strategic?

Jess: Yeah, I mean, I think there’s a—it’s interesting. This is going to sound totally like non sequitur, but what’s coming to mind is I was just talking to a leader about how we ignore the fundamentals of our body in order to get on with, like, the day-to-day because we think it’s more important.

Like, "I’m not going to go to the bathroom right now because I need to answer this email." And then you keep going, "And now I need to go to the meeting, and I’m skipping my lunch because, you know, I need to just do this one analysis."

And before you know it, you haven’t eaten, you haven’t gone to the bathroom, and your body’s not functioning anymore, but it’s like, "But I can do a little bit more work."

Jess: And I feel like the pause, even when it’s the busiest time of year, to just say, pick my head up, look around—like what’s going on a little further down the road—is kind of like, "Let me take a minute and put some food in my body so that I can think more clearly."

And then I can operate actually that much more effectively. It’s that investment. And even though it feels in the moment like, "Ooh, totally worth the trade-off to not use the bathroom because I can answer this email and the impact is going to be immediately more effective," I think it’s that trade-off that I think about.

Jess: And so for those who are saying, "Okay, Jess, I get it. What do I do if I need to pick my head up? What do I do when I pick my head up?" I would say, first, make sure you’ve used the bathroom. But besides that, I would say come back to your why.

Come back to your first principles. Do we have clarity on what our compensation philosophy is going to be in this coming year? Do we have clarity on what the company goals are going to be? Do we have clarity on what our budgets are going to be?

Like really basic questions. We tend to just jump ahead like, "Ooh, let me go down this roadmap really, really far before we’ve even said, let’s make sure that these fundamentals are in place."

Jess: I think the second thing is if you’re just coming out of a compensation cycle—many companies are in the midst of or about to end one—collect feedback while it’s fresh, while everybody still has all these feelings and is like, "You know what would be better?" or "Oh, you know, that actually really worked this time."

Collect the feedback now because then it will, you know, I know we all just go, "Oh, I just need to unwind a little bit and have a little bit of distance." Just put it down somewhere, even if it looks terrible, even if it’s half chicken scratch, just write it down.

Jess: And then the next thing I would say is, when you have distanced yourself from it a bit, do a premortem. And if anybody hasn’t done a premortem before, this comes mostly from the product world where they kind of take this stance of, "Okay, if this product launch were to fail, or if this product doesn’t take off, what are the most likely reasons that it doesn’t go well?"

And you can take this to any process, any project. And so in this case, it’s, "Okay, if we screw up compensation next year, if we screw up total rewards next year, what are the most likely reasons that people are going to get pissed off at us, or that we’re going to get into trouble for it failing, or that disaster befalls us?"

Jess: You kind of make your list and then you start to talk through, "Okay, well, what’s in our control to mitigate those risks now?"

And then the last thing that I would think about is, we talked about stakeholder management being really key. Figure out which stakeholders you need to get involved and be really clear about what you need.

I’ve seen so many leaders come to the table—HR leaders, total rewards leaders—and say, "Hey, you know, we’re running our comp cycle or we’re doing performance management, and here are the dates and everything."

Jess: And they just kind of expect that everybody sort of knows, "Oh, actually, it’s going to take up a lot of time because you’re going to have to sit down with this spreadsheet, or you’re going to have to write up this thing, or you’re going to have to go back and forth."

And it doesn’t process like that for the majority of executives. Be really explicit with them. "At this point in time, we’re going to have an hour where we’re going to brainstorm all the things we want to change about this process. At this point in time, you’re going to receive your spreadsheets, or you’re going to get access to the Aeqium tool, and you’re going to be able to see what everybody’s proposed changes are."

Jess: "You’re going to need to spend at least thirty minutes to an hour going through and reviewing and approving them, and we’re going to need it by this date."

And ask for all the really explicit expectations too, like, "Does this conflict with anything on your team calendars? Open up your calendar, double-check."

Jess: How many of us have been in mid-cycle and some team—no offense to the sales team, y’all are great—but how many times has it been like the sales team is like, "This week is crunch mode for the sales team, and we can’t distract them from anything."

And then how dare you ask our CRO to sit down and take time away from getting in high-revenue numbers at the last minute for this internal process, right?

So many of us in the people space have seen this happen. And whether it’s sales or any other department, there’s always a conflict.

Jess: So let’s figure out those conflicts ahead of time. And then we can plan ahead. We can either move the dates, we can make exceptions, but we can know that in advance rather than being in the midst of the storm and then having to go, "Oh, wait, nobody from the sales team has submitted their stuff. What’s going on?"

And then having to be very reactive about it. Get your stakeholders involved and be really explicit with them about what you need. Make it really easy for them to give you feedback.

Peter: Such helpful tips for controlling the chaos. Jess, again, really appreciate you taking the time to chat with us again today. Always a pleasure, and looking forward to chatting with you again soon.

Jess: Same, Peter. Thanks for having me.

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