The changing landscape of reward

Date: 01/09/15 Duration: 00:18:03

Research suggests that by 2030 there will be more jobs than people. In this talent-led market, reward strategies will become enormously important in helping organisations to stand out and attract and retain the very best candidates. 

In this podcast Charles Cotton, Public Policy Advisor for Reward at CIPD offers insight into the shifting landscape of reward and the challenges of catering to a changing workforce with increasingly diverse needs and preferences. Neil Morrison, Group HR Director at Penguin Random House discusses the importance of reward in creating a fair and transparent culture following the merger of the two publishing houses in 2014. And Kelly Mitchell, Head of People Services at Home Group shares her organisation’s experience of launching an innovative reward scheme and the benefit of good communication and engagement. 

Do you have an unusual or innovative reward scheme? What do your employees most value? Join in the discussion on Twitter @CIPD using the hashtag #cipdpodcasts.


Philippa Lamb: When it comes to recruiting and engaging the very best talent it’s becoming increasingly important to get your reward strategy right.

Neil Morrison: Pay is hugely important to people for obvious reasons and so if you start messing around with people’s benefits and pay you’re not able to explain why then you can really damage your organisation. 

PL: It’s not simply that pay is so emotive for people it’s because the way you approach reward tells a story to employees and potential recruits about the sort of organisation you are. 

Charles Cotton: So it’s not just about finance and benefits and pay, but also career development, flexible working opportunities, employee voice, all of those elements come together to form the reward package which kind of articulates what do you want and what do you need from your employees and how are you going to reward them and recognise them in return. 

PL: The CIPD’s head of reward Charles Cotton there. And it seems that feeling that you’re being recognised for your efforts and achievements is more important for many people than the amount you earn. A survey of 200,000 jobseekers from across 189 countries found that the single most important factor for them when it came to finding the right job was being appreciated for their work. 

Now of course reward comes into this but where did straight up pay come in that list? Way down at number eight, and that's trailing behind good relationships with colleagues and superiors and a good work/life balance. So getting reward right isn’t just a matter of upping salaries, your reward strategy has to reflect that intangible concept of recognition. 

CC: I think what’s important is organisations having a kind of approach where they're saying, “Well how is the work changing, how is the workforce changing, what’s the implications for the workplace in terms of learning and development, finance, financial benefits, pay and benefits etc.? 

PL: And the workforce is changing. By 2030 there's set to be more jobs than people across the developed global economy and that's despite the rise of machines and robots doing our work for us. But what will that mean? Well in a talent-led market companies will have to work harder than ever to make their employee proposition not only competitive but distinct. 

Neil Morrison is HRD on the board at Penguin Random House. The two publishers merged into one global publishing house back in 2014 and I asked him how reward now fits within the overall business strategy.

Neil Morrison: I think it’s been one of the most important parts of forming our new company so the last two years it’s been an absolutely strategic imperative to get reward right and to have a level of fairness. I think it’s also important in terms of transparency and as a board we’ve talked a lot about the culture of being a more transparent organisation post-merger and therefore that's really important. And getting people aligned to the rewards of the business, so if the business does well people benefit, is perhaps one of the biggest incentives that we can give. 

PL: So it really plays into brand for you? 

NM: It absolutely plays into brand and it plays into a sense of who we are and what we’re about internally as well as externally. We want people to feel part of a new organisation. 

PL: With the merging of Penguin and Random House the team had a rare opportunity to look at everything with fresh eyes and, where necessary, start from scratch. 

NM: So that was one of the first challenges we had on bringing the two organisations together was to understand exactly how we were rewarding in the past and what we needed to do going forward. And so we've had the perfect opportunity to look at everything from top to bottom, from cash reward through to benefits, through to holidays, through to all the kind of softer side as well.

PL: Okay so what does it look like now? 

NM: What does it look like now? Well the first thing we did was looking at our benefits portfolio and coming together with one single offering there and we took that chance to really look around what was being used, what wasn't being used, what fitted with different age groups, different demographics and take a chance to look at the market and now that works on an entirely flexible basis. 

PL: Flexible benefits are more appealing than a one size fits all package, and they also tend to improve diversity and inclusion. So more and more organisations are using secondary benefits that go beyond traditional perks and increasingly blur the lines between work and play, office and education. And jobseekers are changing too. For them these benefits aren’t just nice to have add-ons, as perhaps they once were, now jobseekers are far savvier and choosier about what they’re after and the real value of the benefits on offer. Here’s Charles Cotton.

CC: Organisations are also realising that so increasingly introducing flexibility in their benefits package so employees rather than getting a one fits all vanilla approach will allow their employees to select those benefits that best suit their needs and that also then helps accommodate the different needs and wants and aspirations of a multi-generational workforce, up to four, and potentially five generations in one work site. 

PL: Where once it might have been two or three generations working alongside one another in an organisation now, with longer working lives, it can be as many as five. The challenge for employers is to create a reward package that satisfies this new broad variety of ages and life situations. 

Penguin Random House has tried to do just that and they’ve really gone the distance with benefits including tech purchasing schemes, skin clinics, wellbeing offerings and gym membership, to name just a few. 

NM: Often the decisions about benefits are made by people who are maybe slightly older so they have a different value set. So we’re looking at it and people are in a final salary pension scheme or they might really value life assurance. So the idea that if I pass away my family can get how many multiples of my salary might be really important to me. If I'm 22, 23, it probably isn’t that important to me. So that's where the flexibility I think is really valuable that allows you to tailor your package depending your time of life, your personal situation and your own preferences. 

PL: We hear a great deal about what millennials want. They’re talked about as a homogenous group, which is probably the first mistake but what’s your sense of what millennials want that is perhaps different from what the generation before actually were asking for? 

NM: I think one of the big challenges at work is that maybe if you’re entering the workplace now you come in with less of an expectation that you’re going to stay in one place for a longer period of time. And that's a trend that's been going on over the last couple of generations. But if that's the case you’re less likely to want benefits that are tied to a long service element and more likely to want things that you can benefit from now or in the near future. 

So for example we recently changed our sabbatical policy to allow anyone to take a sabbatical after, I think, five years, which is still a relatively long period of service if you’re just entering into the workplace but actually setting that at ten years or 15 years for a lot of people just feels completely irrelevant. 

PL: Unobtainable. 

NM: Yes absolutely. So why would you bother? Allowing people to buy a holiday so that you can actually take more time out to go and do something, to go and travel for example but still stay within the workplace. So I think those lifestyle benefits, as we might horribly call them, are probably some of the things that do appeal. But there are simple things as well, if you can offer discounted insurance, discounted gym membership, things that we all need in our lives, actually entering the workplace if you’re a relatively low salary base that can make all the difference. So I don't think we should forget those other elements as well. 

PL: Kelly Mitchell is head of people services at Home Group. Home Group is the fourth largest housing provider in the UK and Kelly’s been with them for four years. In that time she has completely overhauled their approach to reward. 

Kelly Mitchell: If we rewind back to probably 2012 we had an okay package but probably didn’t appeal to our entire workforce. We knew engagement with our package was fairly low because we’d seen that in our Great Place To Work All Colleague survey. 

PL: Back then the Home Group benefits package was accessed through a variety of different channels. 

KM: So that made it really difficult for them to understand how the individual benefits fed together into a total package, so they didn’t really understand the total value. 

PL: Okay so you saw the problem there and what have you been doing in the last four years how has it changed? 

KM: Well we’ve come on a bit of a journey so we introduced Reward Scene. 

PL: Reward Scene – this is the name of the imaginary town illustrated in a map which creates a street, a boulevard, or an avenue for each of the rewards on offer. 

KM: When we came up with the branding we wanted something that really represented Home Group as a housing provider and a provider of care and support services in the community, so we wanted to create a reward community for our colleagues. We really wanted to put benefits and recognition on the map, so that's exactly what we did. 

So we created an online map. There's three zones so you can bounce down to Benefits Boulevard to access all of your benefits. You can take a stroll to Wellbeing Walk and access all your wellbeing-related initiatives and benefits. And a journey over to Recognition Road will access all of our recognition schemes. 

PL: There’s Gadget Gate, Saving Street, Childcare Close, on Recognition Road for instance you can send congratulatory e-cards to colleagues or managers whenever they do something great. 

KM: It really creates a culture of recognition for low cost but for us extremely high impact. Our designs are really fun and quirky which really links in with our culture and values. We change them regularly throughout the year so themes that we’ve had in the past have included music and we’ve had e-cards such as Stevie Wonder, Signed, Sealed, Delivered, to represent our accountable value. We’ve had Elton John, which was You Rocket Man to represent our energised value. In terms of the outcome that's brought to us we’ve seen over the last 12 months over 12,000 e-cards sent in the organisation. 

PL: And how many people have you got? 

KM: Just over 3,000. 

PL: Okay. 

KM: And we have also seen a 16% increase in colleagues who are saying they’ve received special recognition. 

PL: Effective communicaton is key to upping engagement with the benefits. At Penguin Random House they made it simpler and more streamlined buy designing a one-stop portal. 

NM: So everyone can log onto the portal and they can see their individual benefit profile. They can see the value of it; they can see the choices that exist; they can choose their benefits through it and it has all the information related to how you then use them. So for example if you take a health insurance it has all the telephone numbers, all the contacts within it. So it just really creates one space for anyone who wants to know what they can have and what they can use, they can go to that one place. 

PL: And you’re getting good take-up with it? 

NM: We’re getting brilliant take-up yeah. So when we launched we got over 90% engagement with it. Second year we’ve had over 80% engagement which means that 20% of people are saying, “That's fine I’ll just carry on doing what I'm doing,” 80% are going in and having a look and seeing what they want to choose and what they want to change. 

PL: According to Charles Cotton it wasn't always like this. 

CC: If you go back perhaps ten, 15 years a lot of reward practitioners would assume that a share plan or a pension scheme or a bonus scheme would have communicated itself. And research has indicated that isn’t always the case so you've got to communicate. And also it has to be linked into something like financial education awareness so people understand what’s on offer, what the implications are of certain choices as well as communicating the message via various media. So we’ve moved away from just relying on face to face communication, though that's important, and emails, towards using mobile phones and social media. 

PL: At Home Group the communication strategy for Reward Scene tied in with the organisation’s own brand too. 

KM: So the whole communication approach was based around tour guides, maps, and what was really great is that we actually used our reward and recognition value ambassadors who are made up of colleagues from across the organisation, in different departments, at all different levels, to really get the message out on the ground locally. 

PL: I heard you had people in capes. 

KM: We did. So in the run up to launch day we actually got some branded home hero, superhero capes designed to represent the launch of our new recognition scheme. So we had people wearing the capes around the business in all of our locations, we actually had some more senior managers wearing them and flying around the offices and it really created a buzz and an excitement and I guess people asking, “What is this?” 

PL: And the results are plain to see. 

KM: We have seen take up of our benefits increase by an average of 30% across the board. All in all from an engagement perspective if we look back in 2012 versus after we launched the new site in 2014 we’ve seen a 25% increase in colleagues stating that they receive unique and special benefits. 

PL: An excellent example of the difference between approach reward simply as cash and approaching it as a means of making employees feel recognised. Subtle but highly effective. 

At Penguin Random House they plan to review their cash and non-cash rewards annually and continuously scope out imaginative soft benefit ideas. 

NM: If you change the benefits that are on offer, even if they’re flexible, even if you have to purchase them yourself, there's still a sense that your employer’s thinking about you, they’re thinking about what you might want and might give you another reason to go back in and have another look, whereas if you just have the same old thing on a piece of paper that goes out every year it probably doesn’t create that excitement. 

PL: So that plays into the consumer society a bit as well that you go back because there might be something else? 

NM: Absolutely and also you can get into the portal at home, you can access it via mobile, so you can go and sit with your partner or your friends or whoever’s important to you and go and look at that in your own time. So it is very much that consumerised approach rather than a very traditional enterprise approach. 

PL: If you’re just setting out on this journey here’s a word from Charles Cotton on how to make a start. 

CC: Take a step back and start thinking, well what are we trying to achieve in our organisation and how are the developments going on, politically, economically, socially, environmentally, technologically, changing what we do, when, how and where. And how does that then impact on the types of skills, values and behaviours that we need from our workers? And then looking at well where are the workers coming from, how is the workforce changing in terms of their age, their gender, their race? All those as well as their wants, needs and aspirations. And thinking well finally what does that mean in the workplace?

PL: The next step is to start choosing what you might be able to offer.

CC: What can we do creatively around non-financial rewards? Looking at things like voluntary benefits, similiarly flexible working arrangements, opportunities for career development, having supportive line managers who are able to listen to your views and your concerns but also coach and mentor you. And to a certain extent I don't necessarily think these are necessarily just things that millennials want, I think many people in the rest of the workforce, I think it’s just all the talk about millennials has started making all the other generations think, ‘Well actually I’d quite like that as well.’ 

PL: Well the reward and HR team at Penguin Random House has now completed this task so I asked Neil what lessons he'd learned from the process. 

NM: I think the thing that we maybe would have done differently was realise how complex and how difficult it was going to be right at the go get and when people were asking a statement on where we were going to be and how we were going to change this we perhaps could have caveated it a little bit more because everyone wants everything at once and it was really complex.

I think what we’ve managed to do really well is actually get good solutions rather than just quick solutions, so rather than just try and deal with the complexity by being simple we’ve tried to think it through and come up with hopefully something that's fit for the future and that's really important. 

PL: Next month we’ll be looking at mental health in the workplace. With one in six workers dealing with a mental health problem right now what can employers do to actively help and support good mental health? Join me then.


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