Employees do not understand reward strategies – WorldatWork and Aon Hewitt

Despite the fact that the vast majority of organisations have a written or unwritten reward strategy, less than half of companies believe their employees understand it, according to new survey from the USA by WorldatWork and Aon Hewitt. The study finds that a falling number of organisations use a formal performance matrix or other employee ranking to determine basic salary increases; 13% of the 660 organisations in the survey reported that no guidance on pay determination is provided to managers other than an overall budget figure, a sharp rise on the 1% using this approach in 2014.

The number of organisations using bonuses as part of total pay rose from 59% to 81% between 2010 and 2016, reflecting a shift in variable pay schemes, the authors suggest. The most commonly used methods for evaluating the effectiveness of reward structures are employee turnover and retention data (used by 61% of respondents) and employee satisfaction surveys (used by 47%).

Kerry Chou, Senior Practice Leader for WorldatWork's compensation practice, said:

‘With pay transparency in the news, it is surprising to see the large percentage of companies whose employees are either not familiar with their organisation’s compensation policy or have minimal understanding of it. This new survey also looks at the amount of communication coming from organisations to employees and found it to be decreasing. This might be in response to the mistaken belief that with little change in salary increase budgets, additional communication is unnecessary.’
‘Survey on Compensation Programmes and Practices’, WorldatWork and Aon Hewitt, August 2016. To access the 31-page report, please visit: www.worldatwork.org/adimLink?id=80692