5 ways to strengthen your reward strategy

1. A strong employee value proposition

Articulating the vision of the organisation that can be directly translated into each individual’s role is a key motivator that can feed into every other part of your reward strategy. Equipping individuals with a clear sense of purpose can fuel employee motivation. Dan Pink’s Drive explains how what motivates employees is not linear – it is a complex matrix of factors that covers being given responsibility and purpose, alongside the opportunity to improve. Incentives alone cannot supercharge productivity and higher reward does not automatically equate to better performance in employees.

At Paydata, we urge employers to take pay off of the table as an issue so that it does not become a demotivator, by ensuring that they offer competitive pay which is accurately benchmarked to the relevant sector or to the market rates associated with the role in question. However, more importantly, this ensures that the power of other elements of the reward strategy are unlocked - such as learning and development opportunities. Total Reward Statements can help to underline the investment that employers make in employees, both financial (private healthcare schemes, etc) and non-financial (such as enhanced parental leave or volunteer days).

Being clear both internally and externally about what makes you different as an employer and what you are trying to achieve that makes a greater contribution is crucial. This can help attract the best candidates to improve recruitment and also create cohesive teams who are all aligned to delivering the company’s mission. Again, this doesn’t need significant upfront investment – even if this needs to be tweaked later down the line, standing for something that is agreed at Board-level and sense-tested can equip people with the long-term vision of the business. Being clear across your communications, both internally and externally, about your purpose as an organisation can keep an organisation agile.

2. Ensuring people feel seen and heard

HR’s people focus ensures that individuals are at the centre of the reward strategy. Listening to employees – not necessarily being led by them, but ensuring they feel heard – makes a huge difference to retention rates. With forums to voice their opinions and a strong communications plan to address concerns and accurately capture issues flagged by employees, the employer creates a feedback loop to ensure that individuals feel they have the opportunity to shape the organisation that they are a part of, reinforcing how invested they feel in the firm itself.

When a company takes the time to identify what their employees want from their reward package, this can actually save time and resources. HR teams can more accurately work towards defining a reward and benefits package that is focused on delivering value as opposed to a generic offering. Feedback may centre on the importance of internal parity of pay or being more visible with the opportunities for career progression within the organisation, which organisations can address on an individual basis in the short term and plan how to strengthen this in the long-term.

3. Recognition systems

We have spoken about how money alone in not a motivator, which begs the question about what systems are in place to recognise people on an ongoing basis. Recognising and celebrating achievements may be done on a team-basis, collectively saying thank you for particular help with projects or providing shout outs at team meetings, or being recognised by the leadership team who can shine the spotlight on the work of teams. Again, these gestures do not require a designated budget and are a simple but effective way of ensuring reward is positively framed to champion teams and individuals.

4. Strong line management

Giving line managers the tools to make objective and fair decisions in a consistent way is crucial to fostering strong teams across the business. Ensuring that they have clear guidelines and are singing from the same hymn sheet when it comes to making performance management decisions is important to ensure that each line manager is having equally effective conversations with their direct reports. The risk is that line managers each approach this differently, resulting in inconsistent decisions. Each manager acts as the pivotal connection in many cases between an organisation’s crisis strategy and how well each employee is supported.

There have also been discussions about how different generations require different systems of reward. Meaningful feedback that goes beyond thanks in front of a team or by managers themselves and extends to the whole system of performance management is increasingly expected by millennials. Not many organisations are currently set up for this, with Gallup’s report How Millennials Want to Work and Live highlighting that only 19 per cent of millennials say that they receive routine feedback and only 17 per cent say that the feedback they do receive is meaningful. Crucially, only 15 per cent of millennials say that they actually ask for this – a failure to communicate the desire for feedback is something for line managers to appreciate and act upon to ensure their teams are truly engaged at work.

5. Promote a sense of belonging

Whilst the business case for diversity and inclusion is well established, employers must consider whether they truly champion this across their organisation. Harvard Business Review points out that employers are nervous about the mass exodus happening in today’s workplace. In such volatile times, they looked towards companies successfully retaining people. Those that built a ‘culture of solidarity’ were better braced to weather the storm.

‘If the past 18 months have taught us anything, it’s that employees crave investment in the human aspects of work. Employees are tired and many are grieving. They want a renewed and revised sense of purpose in their work. They want social and interpersonal connections with their colleagues and managers. They want to feel a sense of shared identity. Yes, they want pay, benefits, and perks, but more than that they want to feel valued by their organisations and managers.’

McKinsey Quarterly, Great Attrition or Great Attraction? The choice is yours.