Often when we ask prospective clients about their reward strategy, the response is ‘We don’t have one’.
The result is that reward changes are made in isolation and often in conflict with each other. Decisions made in good faith at the time can later appear quite random and before you know it you have a scattergun approach to pay and benefits. And for organisations that do have a strategy, we often find that it no longer supports the needs of the business or lies unused in a drawer somewhere.
Of course, creating a reward strategy isn’t an immediate panacea to all your reward problems, but it does give you a starting place to go back to, to test your decisions and actions against and form a basis for all subsequent reward design activities so they are aligned with each other and make sense.
It should ideally align your organisation's reward structures and processes with broader business objectives. Setting this direction of travel can be easier than you think.
So, how should you go about it? ABC is a good place to start…
A is for Actual situation. What’s the current reward picture?
Do you know what you spend on pay & benefits?
How do you compare to the market?
What impact do performance levels have on pay?
How do employees feel about their package?
What do your reward structures look like?
Do they work in the way you need them to?
B is for Business direction. Do you know where you’re going?
What are the challenges facing your organisation?
What could the future hold?
What can you afford to spend on reward?
How will you increase performance & contribution?
Who are your competitors?
C is for Current and future employees. What kind of people does your organisation need?
Where will you recruit them from?
What is going on in the market place?
Will you need new skills or different calibre of employee?
By answering some of these questions you can get a sense of where you are now and how far your reward structures are from that aspiration. Challenge your current views; provoke debate among your team around your organisational/cultural ‘DNA’. Ask ‘what type of an organisation are we and how can we use reward to drive and support our desired behaviours?’
A good reward strategy is not about generating long policies that will sit in a drawer. For us a good reward strategy is about creating a set of principles that outline what you want reward in your organisation to achieve.
They should summarise your agreed view on; where you want to position yourselves compared to your competitors, how you will recognise contribution, and what the employee deal looks like, and so on. They should also ideally be created with input from across the organisation. This means they reflect not just Board aspiration, but also employee desires.
Your reward strategy should act as a key reference point for all future decisions on pay and performance philosophy, describing your position on base pay, bonus, benefits, recognition and performance.
Ultimately, your reward strategy should help ensure that you can retain, motivate and manage your talent. So what’s stopping you making a start today?
To talk to us about your reward strategy, or any other aspect of pay and reward, email Justine.firstname.lastname@example.org or call 020 3457 0894.