Posted on: 21 April 2015
Reward 101 for HR Generalists
HR Reward | Reward Consultancy | Reward Intelligence | Reward Strategy |
When I held in-house roles, HR colleagues of mine were often put off by the tools of the reward trade. Yet reward is so much more than just spreadsheets and more spreadsheets. Before you get to the spreadsheets there is a lot to take into account. As a starter, here are five things for you to consider when thinking about reward in your role.
Step 1: Know the business
Reward needs to fit with and support the aims and aspirations of your business. It is no good rewarding people for something you don’t want them doing. Try to think about why you are rewarding people in the first place, what areas of the business are struggling to recruit or retain people, where are your top performers, what is the plan with top performers, how can reward help them?
Step 2: What is your reward philosophy?
When you understand the business, you can think about how you want to reward. This will give you a great framework when creating reward strategies and structures. It doesn’t need to be complicated or clever; it is simply about using what you know about the business to decide on some bookends for your reward methods.
Consider how your organisation measures performance;
- What does good look like?
- Is it about targets and goals or how an outcome was achieved?
- How do you want to pay people compared to the market?
- Is paying at the median enough if you have growing business aspirations and need talent to join you and stay?
- Should everyone share in the success of the business or should it be distributed to those directly influencing results?
Step 3: Hold up the mirror
Now that you have thought about how you need to reward, how does this compare to what you do currently? Hopefully, you will find a lot of crossover which is great, but where are the gaps and what isn’t working? Try to dig deeper to get to the root cause of what isn’t working or why there is a gap. For example if you want to reward based on performance but you aren’t currently doing so, keep looking at the detail. Do you have a fit for purpose performance appraisal with a rating mechanism that measures the right performance? Are managers consistent in ratings and is there a robust moderation process?
Step 4: Don’t panic
You might now be feeling a bit daunted if you have a long list, and at this point there is probably no getting away from spreadsheets to make life easier. But stay with me, it will be worth it in the end. As with any list you need try to break it down into things that you need to do now, things that can wait and things that it would be nice to do when you get around to them.
I would expect that no matter what is top of your list, a good starting point will be to undertake some pay benchmarking. This will inform how you are actually paying against the market and help guide your decisions on creating pay structures, bonus schemes, and talent management. Pay benchmarking will often form the foundations of our projects with clients due to its diagnostic nature, allowing us to make confident decisions with real insight.
Step 5: Keep it simple
Finally, try to keep it simple and manageable. A reward that people don’t understand isn’t really rewarding. Also, the more complicated it is, the more complicated it will be to administer and the less flexible it will be to react to change.
Flexible schemes can be developed, changed and added to over time as the business develops and changes, without the need for detailed re-designs. As businesses transform and targets shift, the benefit of flexible reward is that reward stays relevant and supportive of business goals rather than becoming outdated and rewarding for the wrong reasons.
Ultimately, reward touches on so many areas of HR and the business, and it is there to help retain, motivate and manage your talent - getting it right can be invaluable. It provides a brilliant insight to the business and is a real opportunity for HR to be involved at the top table, discussing and shaping the future. Don’t wait for another colleague to pick it up, follow these steps and get noticed.