A new benefits strategy can revolutionise the way that your employees are managed, encouraged and incentivised. Yet many companies fail to recognise that if you get your Reward System right then Employees become much more focused on their own performance. If staff know what they need to do to achieve business goals and, crucially, how they can improve their own package by being more productive – you’ve cracked it.
The constant change that surrounds most industry sectors these days requires that you regularly review your business goals and it makes sense to review the Reward Systems at the same time. I can’t go into all the ins and outs of the process in this short blog (you will have to hire me for that) but I will give you a few things to consider.
Underlying Pay Framework
Understanding your underlying Pay Framework is a good place to start as any reward revisions will rest upon it. Frameworks can differ greatly; some offer broad banding, others narrow and keenly defined salary ranges. All have strengths and weaknesses. You might have a grading arrangement that links benefits to types of roles or a system that offers a range of cafeteria benefits? Does your framework encourage customer service? Does it need to change to allow for your revisions? Whatever you decide there should be a robust structure in place that makes certain that compensation and benefits issues (sickness absence, healthcare, car allowances, bonuses, incentives etc.) are properly managed and that your staff are paid correctly and on time. Make sure you know your framework inside out.
Attitude is an important factor for success
Putting in place a well constructed Reward System is an opportunity to encourage the behaviours, values and skills that are specific to your business – the factors that drive your business DNA! It will help you achieve your revised business plans and get to your growth targets much quicker. It’s a worthwhile investment because just as a good reward package will drive up performance it’s also really useful in embedding the new goals in the hearts and minds of your teams.
A system that rewards better performing staff will communicate your expectations to both high performers as well as the current low performers. To send this message you may decide to offer variable pay – the current trend is around about 8% on top of base pay.
Reviewing your Rewards
I’m over simplifying the process here, I know, but in a nutshell, you will do four things:
- Analyse and cost your current reward system; What results, targets and revenue is it driving? Is it pushing the productivity and efficiency you desire? Is it ensuring customer loyalty?
- Doing this will help you move to the next step which is to identify, exactly, the results that you want to get from your new Reward System. It allows you to peruse how you can achieve the targets and new business goals. You might also want to do some industry benchmarking at this stage to understand where you sit in the market so that you are able to recruit and retain cost-effectively and make informed reward decisions.
- What’s the gap between point 1 and 2? Decide what Rewards/Incentives/Bonuses you will need/can afford to offer and that encourage employees to achieve your desired goals. Look for any “self funding” opportunities where you pay out rewards based on productivity/efficiency/sales above a certain level or once you have achieved your financial plan. How will cost affect your remuneration bill? What will your remuneration be as a percentage of revenue?
- Think about what other types of recognition will encourage
- high performance and reward desired core competency. For example non-financial reward such as mentoring, coaching and personal development options. People often join a company for more money and leave for lack of recognition. A very sensible chap called Ken Blanchard once said “Catch People doing something right!”
While, going through this process you might find the current benefits package has little or no link to organisational objectives and desired behaviours. Maybe your unique customer service values are not being encouraged by your current rewards or perhaps performance is not properly measured. If so, you have a clear opportunity to improve things. Seize it.
Aim to enhance the way your system works so that it is a win win situation for both the company and the employees
Employees must be able to trust that the organisation will do what they say they will; i.e. if the Business Plan is met then performance will be rewarded financially. Therefore, it is imperative that you turn over every stone and calculate every last expense and benefit when pulling your proposal together.
That’s because an obvious obstacle that you will have to overcome is that the benefits package has to be financially viable, good enough to retain and recruit top talent and encourage high performance whilst also linking into the organisation’s financial plan. You’ll need backing from the CEO and other key stakeholders. Do yourself a favour early on and find out who ultimately holds the purse strings.
Designing and implementing a Strategy that links together reward, desired attitude and competences to produce a high performing culture is no mean feat and it can feel like you’re pulling teeth at times…but press on. The soundest systems telegraph a clear message to staff that you want to reward them when they are highly productive because that is the way that the business will achieve success. The most intelligent reward systems are cost effective, market placed, customer centric and flexible enough to support growth
Your reward system will have both a quantitative and a cultural impact so it is well worth putting a lot of time, effort and expertise into ensuring that you have the best in the business. Not the most expensive! It’s the most well thought out that’ll drive the optimum results, targets and customer service.
Finally, make sure your Reward System lives and breathes the wise words of Mr. Ford; “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”
Article first published in http://www.thechangedirectors.co.uk/Pages/Link-reward-to-business-goals.aspx