Or “Comp and Bens” as we used to call it. From pay to pensions, flexible benefits to sales incentive plans and everything in between. Reward is a big part of the employee contract, both written and psychological. It is what you receive, for the work done.
What is reward for? The traditional view is that it is all about attracting, retaining and motivating employees. But of course there is more to each of those areas than just remuneration. Recognition is a big part of it too, and the two terms are often used in one sentence. But more on that later. Of course there is also plenty more to attraction, retention and engagement than reward too, even its widest sense. To some, learning and development or progression opportunities are more important than reward. To others, it might be about the purpose of the organisation, or the impact that they can make with their role. With others it might be about practical stuff like hours of work or location. So reward is just a part of what makes someone want to work somewhere and stay somewhere, as well as leave.
As a subject, reward is a huge area. Larger organisations might be lucky enough to have a specialist in the field. There are financial and non-financial types of reward. There are some elements of reward that are regulated or even required by legislation, such as pensions, equal pay and annual leave (in the UK at least). Other HR topics around reward include job evaluation, executive remuneration, incentives, pay progression, pay bands, flexible benefits, voluntary benefits, medical benefits…. Like with many aspects of HR, acronyms and jargon abound: PMI, PHI, RPI, Rem Co…. We could go on, but we won’t.
It is clear that there are a whole host of areas to consider for any HR professional when it comes to reward. Some of them are so large in their own right they are way beyond the scope of this little book. Here are just a few reward-based ideas and suggestions from us that you might want to try out at your place.
Recommendations about reward:
• Read “Drive” by Dan Pink if you want your assumptions about reward to be challenged and the evidence to challenge others about it too.
• Learn a little something about the neuroscience of reward. Every HR professional should, and it will allow you to have impactful and useful conversations with your management teams, as well as challenge some accepted wisdom.
• Always carefully consider the potential consequences of any reward that you offer – intended or otherwise.
• Offer flexibility and choice around reward wherever you can. What people want and need from their benefits package differs. One size most definitely does not fit all.
• Make choices as wide as you can. If you offer a company car scheme and there are three cars to choose from, make it six, or eight or 100. It doesn’t cost you any more as long as you manage it effectively.
• Most people are happy to fund benefits themselves. Bike schemes, cash plans, extra holiday… these are just a few of the benefits that can cost you little to administer and nothing to offer as the employee funds it themselves. And you get the National Insurance savings too. Bonus all round.
• If you do manage to drive National Insurance savings through using a salary sacrifice programme, make sure you capture those savings and use them to invest in more benefits for your people.
• Ask people what they want.
• Monitor your take up of any flexible benefits that you offer, and keep them under review.
• Think very, very carefully before linking performance and pay. In fact, don’t. It drives unintended consequences and rarely gives you what you think it might.
• Do an equal pay audit. Just a simple one. You might be surprised. Or horrified.
• Determine a criteria for pay reviews outside of your annual review process. Circumstances in which you will consider a base salary change. It might be additional duties, it might be a new qualification, but define it all the same.
• When it comes to your annual pay review, decide what it is fundamentally for. Is it about, for example, recognising a rising cost of living? Are you trying to reward something by it, or drive something or change something? We are not advocates for performance related pay as we have already said, but understanding why you reward will help you decide how.
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