Reward metrics based on business outcomes - an opportunity for HR

By Tony Hatton-Gore, Reward and Human Resources Consulting

When times are tough we can expect more focus on the money. We see this in the news, whether exemplified by high profile individual cases such as those of former Governor General of the BBC George Entwistle and C4 racing pundit John McCririck; or by more esoteric issues as the implications of Basel III for relating financial sector reward to risk.

Organisations are looking for value from reward programmes generally, as well as in relation to the headline cases. For individuals reward may be seen as the hard edge of HR, as a job offer may help distil life decisions about career and employment aspirations.

Focus on reward spend at an organisation level is often about two aspects: communication and return on investment. 

As mentioned in the recent blog by Sylvia Doyle, the CIPD’s reward risks survey highlighted the importance of the role of reward communication in promoting employee appreciation of the value of the package and employee engagement.

However, organisations must be able to analyse the potential and actual impact of their reward policies to inform employee communication.

A recent Mercer report* included these findings:

  • HR is falling behind other functions in the use of more sophisticated analytics; and among the apparent reasons is a (rather distressing) belief that HR is not sufficiently skilled to use such techniques
  • The two top potential uses of HR analytics among respondents are:

                    “Which elements of our rewards strategy effectively motivate our best-performing employees”
                    “Whether our rewards strategy effectively motivates and engages our best-performing employees”

There is a great opportunity for HR to invest in improving the return on investment for total reward and the reward management capability of the organisation by:

  • Better reward communication that both articulates reward strategy and what it means for the individual for a positive impact on employee engagement
  • Analysing the impact of reward in terms of outcomes such as attraction, retention and motivation

Both would themselves help refine reward strategy and improve the organisation’s reward management capability.

We need to demonstrate the business case and the outcomes associated with reward policies to make a real difference to the business. Let’s not waste the opportunity!

It is important to ensure that reward/HR has robust analytical skills; that we can interrogate our systems effectively for detailed management information; and that we can deliver both corporate messages and individual reward information consistently and with impact.

*Usage of metrics and analytics in EMEA
moving up the maturity curve

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