Getting your rewards strategy in order
With an increasing focus on creating a productive workforce as the business environment becomes more competitive, organizations are looking closely at the engagement levels of the employees within the organization and are realizing the importance of a robust Total Rewards program towards attracting, retaining and motivating talent. According to a recent India Recruiting Trends 2016 report by LinkedIn, around 83 percent of the companies globally have defined acquiring the right talent as a business imperative. And with millennials entering the talent pools along with heterogeneous workforce, organizations are facing wide-ranging expectations from employees. On the other hand, the increased application of technology has also created a growing need within companies to re-think their people management practices.
The effect of such an evolving business ecosystem has been felt across the spectrum of functions that fall within the domain of HR professionals. From front-end recruiting to managing healthy employee attrition, organizations today are demanding more from their HR function. With such greater business focus on engaging, motivating and retaining the right talent, HR professionals need to look beyond the obvious to strategize and streamline their processes, especially the Total Rewards space.
Rewards in the modern context
Given the plethora of options that are available for Rewards professionals coupled with limited budgets, there is a need to have efficient rewards program. While Total Rewards, traditionally in the form of compensation and benefits have formed the bedrock of various employee engagement and motivation programs, there has been an increasing focus on non-monetary benefits and recognition practices that have further expanded the options that reward professionals have to choose from. The growing spectrum of options has, in turn, made it necessary for rewards programs to be more contextual and relevant for their workforce. The evolving law and policy structures within the nation, in recent times, have also played a vital role in designing rewards programs, for example, the recent ruling on maternity care has further laid down minimum requirements of a rewards program.
“The unique thing that rewards professionals bring to the table is that they give insights to what is happening in the industry”
– Mahalakshmi R, Mondelez International
“So how can rewards professionals look at executing and monitoring the impact of their rewards programs?” The key theme in the recently concluded People Matters Total Rewards Conclave 2017revolved around this very question along with – “How do you know your rewards strategy work?” The panelists of the conclave included Amitabh Johri, Head of Strategic Initiatives, Quatrro; Isaac Koshy, AVP, Rewards, Emirates NBD; Mahalakshmi R, Head HR India, Mondelez; and Nishit Shah, CFO, Infosys BPO, with Ester Martinez, CEO, and Editor-in-Chief, People Matters moderating the panel discussions. During the panel discussions, it was deduced that when designing and executing a Total Rewards strategy, its proper execution and proper monitoring should be considered crucial.
The case of proper execution
One of the key points discussed during the conclave discussions was the need for rewards professionals and the HR department to focus on the proper execution of a rewards program. From bringing in the right stakeholders at the strategizing phase, to working closely with the line managers to ensure proper execution, the entire cycle requires a close scrutiny by rewards professionals. One key factor while designing the rewards strategy is that it should be aligned to the overall business strategy. “The rewards strategy stems from the business strategy. Business needs are different at different stages – sometimes the business objective is to optimize costs, sometimes it is to increase market share. So the rewards strategy needs to be aligned to the same” shared Quatrro’s Amitabh Johri, who gave a simplistic process flowchart for creating the right rewards strategy:
Johri added that, “The business sets its strategic objectivesinto an operational plan. This tactical plan translates into KRAs and KPIs which are then used to define the rewards strategy. ”
But any rewards plan that is truly holistic needs to reflect the expectations of the employees. And this requires negotiations and it often becomes a task to get the various stakeholders onboard. Mahalakshmi R, Head HR India at Mondelz mentions that, “Calculating the right people cost is the first step towards creating a holistic rewards program. It is often about being optimal in getting the right talent at the right place while ensuring that the costs aren’t inflated out of hand.” Mahalakshmi goes on to say that “Rewards professionals are facilitators and not drivers. So instead of engaging in a tug-of-war, rewards professionals need to look at creating a fluid process. The role of rewards professionals involves making the right choices, playing within the boundaries as decided mutually with the board and using the allocated budgets in the most optimal manner. They have to do the best with what they have.”
The case of proper monitoring
A key tenet while monitoring any strategy should be that it has to be measured keeping three stakeholders in mind —external stakeholders, internal stakeholders, and employees. The same applies to any rewards strategy. Any rewards program should be assessed by its impact on all the key stakeholders as it will help Rewards professionals to create the right case. Reward strategies can be assessed by evaluating their impact on leading indicators of employee engagement. However, rewards program’s impact on such metrics varies from business to business and relies on a combination of factors including industry dynamics and market trends. Infosys BPO’s Nishit Shah, highlighted that they use employee motivation levels and attrition numbers (among other metrics) to measure the efficacy of their rewards programs.
Any rewards plan that is truly holistic needs to reflect the expectations of the employees
The panel also deliberated upon the viability of measuring the effectiveness of rewards program on a real-time basis. And it is important to study the lead indicators. “In the BPO industry”, Nishit Shah adds, “it is easier considering the extremely high levels of the attrition rate. We introduced a non-cash rewards program and saw a drop in attrition numbers within the first three months.” Such lead indicators should be created and assessed at regular intervals, and the periodicity should be chosen to best match the employee size and the lead indicators in consideration.
The panel also agreed that it is critical to carefully look at the right course corrective action that needs to be taken after identifying whether the strategy is working real-time or not. Quatrro’s Amitabh Johri suggested that “one should take periodic (most probably quarterly) dipsticks to check the efficacy of a rewards strategy. And you recalibrate and create a plan if needed based on the new market strategy.” This becomes even more relevant in today's evolving market conditions. As Isaac Koshy from Emirates NBD states, “It takes many permutations and combinations to get a rewards strategy right, but knowing whether this is working or not, always assists in recalibrating till one finally has a good working rewards strategy.”