Does reward feature on your new year’s resolution list?

By Sylvia Doyle, Managing Consultant - Reward First ® People Consulting

New Year is often marked by those great resolutions for the year ahead or at least for the early part of January... However this is also the time when we evaluate our careers, reflecting on what we’ve done and what we plan to do over the year ahead. This raises the wider question on how we, as HR and reward professionals, can use our influence to make 2013 a better year.

Yes, 2012 was an amazing year for the Olympics. However the negative press on executive pay awards and bonuses, even those which were later rescinded. Understandably this has raised questions on the role of HR and Reward professionals, as many staff received little or no pay award during this time.

If we are to play a proactive role in helping organisations make better reward decisions then we need to work towards aligning reward practices to organisational goals that take account of all employee groups. Looking at recent annual remuneration reports, while the narrative of ‘transparency’ and ‘sustainability’ can beguile the rhetoric gap between what is said and what is done persists in some quarters.

One of the major reward management changes over the past decade is the devolution of reward decisions to managers. When this works well, it can be hugely effective however the reality ‘on the ground’ can be quite different. With this in mind, let’s consider some key questions:

  • Have we got the right reward frameworks in place? This continues to be a major stumbling block and need regular review to ensure that reward frameworks are ‘fit for purpose’ especially as the organisation evolves.
  • Do managers have access to good quality tools and support? Credibility relies on managers being seen as fair and consistent and offering the right support (beyond HR shared service centre) helps managers make informed reward judgements aligned to business goals and culture. Needless to say managers need access to training and regular updates which needs to be part of the deal.
  • To what extent do reward decisions reflect business and wider outcomes? A skewed curve towards high performance raises alarm bells for an under-performing unit. However are other areas incl. diversity being addressed?
  • Is reward communications up to the job? Good communications may be the single most important factor in the successful implementation of reward change. It’s also critical to ensure that staff appreciate the value of their reward offering as this was the top risk issue in the CIPD 2012 Reward risks survey
  • How can we influence strategic reward outcomes? While we need to continue evaluating outcomes and other metrics, let’s not forget the on-going need for dialogue at the top as well as visibility across the organisation to influence reward decisions that move us in the right direction.

What do you believe will help organisations to make reward decisions that we can be proud of this year?

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  • An excellent post.  The issue of “fairness” in pay is going to be close to the top of the agenda for Reward professionals in the coming year.  This issue is closely linked, as Sylvia has noted, to good communication with all the stakeholders, staff, management, Remco, shareholder advocacy groups, shareholders, Regulators, the media and the public.

    Alignment with business strategy is also key.  The issue, in my view, is how we align reward with business success which, at least over the short term, is difficult to measure in a sustainable way.  As we have seen in Banking, today’s profits are often tomorrow’s losses…. Getting the risk adjusted reward correctly calibrated and appropriately aligned is an interesting challenge that will be magnified as the world economy moves through the uncertainty of current economic and geopolitical events

  • Some excellent reminders Sylvia. My instant thought in answer to your final questions - what will it take to make "reward decisions to be proud of" is this: Absolutely critical, I belive, is the perception of fairness and equity.  This is nothing new, of course, but it is fundamental.

    As decisions are devolved to line managers how can HR support them in making reward decisions that are seen as fair accross divisions and teams? And how do leaders respond to questions about apparently disproportionate bonuses for some when staff down the line are being told that everyone's contribution is critical? As Ian points out, success is difficult to measure, and I would add, so is contribution  if we look beyond the immediately visible impact.

  • Ian & Eva - thank you very much for your feedback and comments.

    Ian, I agree that aligning reward to business success over short term can be challenging. It will be interesting to see where it features on the 2013 reward risks survey as well as the agenda of HR & reward professionals.  

    Eva, your point on perception of fairness and equity is absolutely spot on. I believe this is 'work in progress' and needs to feature high on leaders' priorities so reward decisions properly take account of staff as well as other stakeholders.

    Will 2013 see these issues moving a step closer to being resolved?