Is your business' Reward Strategy doing its job?
Stuart Hyland explores the business impact of having a tailored Reward Strategy in place
It has been a challenging few years for employers who have had to rapidly adapt their reward practices to try and keep pace with business change and evolving employee expectations, all while managing an ever-increasing focus on cost management.
This is not an easy balance to achieve, and it is not something which is going to get any simpler in the near future. New pay transparency requirements will soon be shining the spotlight on reward practices more intensely than ever before in the EU, with knock-on effects for the UK and other closely related markets. All of this is happening at a time when employers are having to work harder than ever before to retain people as attraction has become a major issue with declining talent pools and increased competition for valued skills sets. Whichever way you look at it, the reward challenge is only going to intensify in the coming years.
In this context, how valuable would it be to have a ‘guiding light’ that an employer could use to simplify their decisions and evolutions in reward? One that could not only ensure consistency in decision-making but also ensures that the organisation’s values and culture were being continually re-enforced and embedded while adding value to the business and employees?
This is just part of the value that an effective and documented Reward Strategy can add to a business. It is a source of constant surprise that so many employers do not have one, or they have one which is outdated and just sits on a proverbial dusty shelf in HR that nobody knows about.
In failing to consider and document a clear Reward Strategy, an employer is missing out on many potential benefits and will be giving a source of competitive advantage away.
An effective Reward Strategy
An effective Reward Strategy that is tailored to the specific needs of your business and reflects the expectations and needs of your people can, and should, deliver many benefits.
The resulting reward offer is tailored to the expectations of your employees
Reward approaches can be tailored to specific talent pools to ensure it is particularly compelling and attractive for those specific groups
It is widely recognised that engaged employees deliver increased performance over less engaged colleagues and an effective Reward Strategy will improve employee engagement
It will help to ensure that the performance that is delivered is genuinely aligned with business needs and aspirations by creating aligned win-win outcomes for the employer and the employee
Every organisation has a unique legacy and set of values and behaviours (its ‘DNA’) that it wants to underpin exactly ‘how’ it does business. A Reward Strategy is a central component of focusing employees not only on the ‘what’ but also the ‘how’ by ensuring that the desired behaviours are rewarded (and undesirable behaviours discouraged) as appropriate in addition to more tangible KPIs
An effective Reward Strategy will ensure that an organisation has a package that is relevant and compelling for its employees and desired talent pools. In practice this enables an organisation to focus its spend on those elements that will have a positive impact and remove any superfluous, non-value adding parts of the offer thereby ensuring that their people investment is focused to best effect
There are an increasing number of regulations coming into force around the world that require employers to be more transparent with their reward approaches. A documented Reward Strategy will enable and simplify this transparency by providing a source document that sets out what reward components are offered, why they are offered, and how they are delivered fairly and consistently to employees
A Reward Strategy document provides a consistent blueprint for the design and delivery of reward solutions and sets out any criteria and conditions that would need to exist for any exceptions to be made. This helps to ensure the fair and consistent delivery of reward to all employees and reduces the frequency (and risk) presented by ‘ad-hoc’ adjustments
When the reward offer needs to evolve, the Reward Strategy will provide the rationale and key features of any design evolutions. This makes the business case for change much easier to build and the design process itself is simplified as it enables an early focus on particular options within a clear, longer term vision
Building without a plan can be an expensive and short-term solution
Failing to have a centrally agreed reward philosophy and strategy in place at a time of intense focus, pressure and change is clearly a big risk. If you were to build a house at pace with no blueprints or plans, the resulting building would probably have four walls and a roof. It may even have windows and a front door, but it probably would not stand up for long as it would have some weak areas and some parts that would be over-engineered! It’s the same for reward frameworks. Delivering evolution and change on an ad-hoc basis and without a clear guiding light and blueprint raises the very real risk of the whole thing falling apart and failing to deliver the value it needs to, at a time when that value is most needed by an employer and when the risk of failure has never been higher.
Would you like to know more?
If you have any questions about the above and how it applies to your business, please get in touch with your usual Blick Rothenberg contact or Stuart Hyland using the details on this page.
Reward Advisory Services
Attract, engage and retain the right talent
Attracting and retaining top talent remains a key challenge for many organisations. People are the heart of your business and working to establish an effective reward structure will help to retain talent and drive performance.
Our team of experts can work with you to create a reward structure that is both tax efficient and compliant while being attractive to employees.
We are a ‘one stop’ advisor and provide both tax planning and the ongoing reporting including personal tax returns, and employer obligations such as Employment Related Securities (ERS) reporting.
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