How resilient is the American Dream?

That was one of several big and engaging questions that have come out of discussions with compensation experts I’ve held in recent weeks for a new research project. These discussions honed in on several compensation risks, which I’ll get to in a moment.

The American Dream question arose when a compensation consultant discussed his concerns about the growing gap between executive compensation and general workforce compensation.

Base pay among the general workforce of U.S. companies is projected to rise somewhere between 2.7 percent and 3 percent in 2012. In 2011 general-workforce base pay roses 2.9 percent, according to Mercer’s annual “U.S. Compensation Planning Survey;” in 2010, it rose 2.7 percent. These annual percentage increases — which were above 4 percent from 1995 through 2001 and at or above 3.4 percent from 2002 through 2008, according to Aon Hewitt research – have yet to recover from the impact of the global financial crisis.

Americans have long had a high tolerance – much higher than Europeans, for example – for high executive pay packages. This is in part because Americans believe that their society affords them the freedom and opportunity to one day receive an extremely lucrative executive pay package. However, as the growth gap in executive pay and general workforce pay widens, some compensation consultants are concerned that the belief in this dream may buckle under the weight of ever-increasing work and stagnating salary increases. “Is this an emerging issue where employees will at some point rebel?” asked the comp consultant.

It’s an eye-opening question. Here are several other preliminary stabs at compensation-related risks (both executive and general workforce) I’ve heard in the past two weeks:

Complexity: As executive comp committees strive to strengthen pay-for-performance links by scrutinizing which measures to use and what performance goals to select, many executive compensation programs are threatening to become over-complicated. A “portfolio” of long-term incentive vehicles may be necessary, but it is also necessary to be able to translate these programs into plain English to manage the risk of shareholders and headlines-writers misunderstanding the portfolio.

Misalignment: While everyone focuses on aligning pay for performance, another form of misalignment is rearing its head. While the vast majority of executives (roughly 90 percent) indicate that their organizational rewards program achieves its objective, far fewer rank and file employees share that belief. Only about half the general workforce say that their organization’s rewards program walks the talk, so to speak.

Unemployment: High unemployment rates in the U.S. mask a growing skills gap that could create major problems in the coming years. Companies have stopped trying to fill as many as three million vacant positions because they cannot find skilled candidates. As finance executives take on a greater role in many human resources activities, this issue can easily be glossed over. Leading companies are addressing the skills gap by compensating their high-performers – as well as employees in positions of greater impact to the organization – differently (i.e., better) than the rest of the workforce. But not all companies are “differentiating” and “segmenting” as effectively as they could be doing, according to several comp consultants.

What’s more, many employers don’t understand what is important to high-potential employees, according to Towers Watson research. Asked to identify the rewards priorities of high-potential employees, executives most frequently place “nature of work,” “challenging work” and other non-financial qualities above base pay. However, when high-potential employees answer the same question, they place base pay as their second highest priority.

Interesting, nuanced, and fraught with risk. Compensation risks, when managed intelligently and effectively, can enable companies to avoid the bad stuff and achieve more of the good stuff.