Organisations will need sophisticated measurement systems to provide an objective and transparent process
As companies finalize their performance cycle and review their reward programs for the upcoming financial year, the Edenred – People Matters Total Rewards Conclave this year brought together HR Heads and C&B specialists to share the key trends in Total Rewards. Presented here are highlights of what business leaders said on the topic during the Conclave.
This Rewards Special will help you understand the complex implication of Total Rewards on employee motivation and the bottom line alike. While the options are many, finding the right mix is important and unique to each organization, making the need to get the Total Rewards mix right every time
TOP TRENDS TO WATCH OUT FOR IN 2011
• Recognition strategy will continue to be the base for reward programs. Companies will need to define a macro recognition strategy which is aligned to business goals and endorsed by the leadership team. The traditional performance management strategy will link organizational goals with the desired behavior, generating a consistent and output-oriented result, ensuring internal equity while maintaining a close eye on external competitiveness.
• Reward programs will need to look at rewarding individuals while keeping an eye on teams. Recognizing innovation and ownership from high performers will be important, and rewarding teams will impact overall morale.
• Expectations in performance improvement will be steep, and achievements will be rewarded. If an organization can move the performance curve by just one standard deviation to the right, research shows that an organization can improve productivity by 20 to 120 percent, depending on the nature of the employee’s work.
• The time for investing in systems has come. Organizations will increasingly need sophisticated measurement systems to provide an objective and transparent process without losing emphasis of people orientation.
• The role of line managers will be key in the success of any reward strategy. Involvement of line managers in design, implementation, rewardee identification and communication will have no substitute.
• Differentiation will be the language of rewards. One size will not fit all and tailor-made reward programs to address diverse employee segments and generations will be required.
• Organizations in emerging markets are expected to experience a paradigm shift in the way compensation is structured. It will see a shift in focus from fixed to variable elements. However, historic legacy of fixed compensation and two-tier pay levels will slow the pace of this shift. Variable pay schemes requires close examination to check whether they are reinforcing behaviors that bring benefit to the organization and are not just benefits for the individual employee alone.
• Companies will need to build the emotional connect with their employees to extract the fruits of engagement and motivation.
• Executive compensation will gain focus again. The governance of pay decisions will need appropriate management – independence in the process and ownership at the board level, instead of the CEO or CHRO level, will be required.
• ESOPs continue to be the way to link personal wealth creation to organizational wealth creation, and will help organizations in reducing cash costs (the market pays, not the company) and this will further promote a culture of employee ownership.