The ever-changing world that we live in requires employers to adapt and balance understanding their employees with constrained HR budgets.
A common misconception when planning reward strategies for 2022 is that successful approaches to defining pay and benefits require huge, large scale investment or complex projects. However, the key to bolstering the approach a company takes is ensuring that the focus is consistently brought back to the individual and the value they derive from their reward scheme. How can employers successfully navigate their way through ongoing uncertainty and strengthen their business and people strategy?
The business case
The ‘Great Resignation’ is a phenomenon that has been accelerated by the pandemic. The last 18 months has transformed the way we work. In unprecedented times, employers have had to ensure that their reward strategy remains relevant and constantly adapts to their employees’ needs. The pressure on HR to balance time, resource and cost considerations may have meant that they focused on weathering the storm and the immediate priorities this flagged, meaning that reviews of their people strategy were postponed. However, this directly impacts the recruitment and retention capabilities of teams.
We outline what employers can do to make a positive impact in the short-term to make people feel valued, that can be implemented today on a limited budget. These are the key pillars of a reward proposition that are crucial to keeping people.
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 reportHow 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.’
Authenticity in the workplace has been intensified by the pandemic – without the personal and professional divide, following everyone having a window into one another’s homes over the past 18 months, 51 per cent of respondents to McKinsey’s research ‘Great Attrition or Great Attraction?’ cited lacking a sense of belonging at work as one of the main reasons for leaving. Purpose goes hand in hand with belonging. Creating an aspirational culture where employees support one another goes to the heart of successful companies.
Get in touch
Whether you are looking to sense check your current approach or define short-term adjustments that you can make today to strengthen your people strategy, we would welcome the opportunity to talk this through. Call us today to discuss how we can help you to shape your reward and benefits package to deliver true value to your employees.
Tim is a passionate HR specialist with over 20 years’ experience in pay and reward. As a director of Paydata, Tim has worked with thousands of satis...