Half of companies plan to increase focus on employee engagement in reward programmes


Half of companies plan to increase focus on employee engagement in reward programmes

A new Hay Group and WorldatWork study finds that 57% of companies plan to increase their focus on employee engagement in measuring their reward programmes during the next two to three years, while 64% will also raise their future focus on the motivational value of reward programmes.

The “Reward Next Practices” survey is based on replies from more than 760 organisations in 66 countries. Its purpose was to determine the reward practices of global organisations during the next two to three years.


“Tough times mean that companies are still maintaining a sharp focus on costs,” said Anne Ruddy, President of WorldatWork. The study found that a strong majority of organisations plan to increase their focus on improving the “pay-for-performance orientation" of their reward programmes. “We are seeing a strong future trend in achieving a better balance between the financial management and motivational aspects of reward,” added Ruddy.

Performance metrics weighted towards financial criteria

According to the study, current performance metrics for reward programme are more heavily weighted toward financial performance than employee engagement:

  • Companies report a current focus of 71% on using financial performance measurements, compared with only 40% on employee engagement.

  • Other performance standards, such as customer satisfaction, innovation, talent management and employee engagement are all at less than 40% of current focus by organisations.

  • Of all of these metrics, organisations report a more intense future focus (57%) on employee engagement performance.

The study also found that 57% of companies plan to raise their future focus on regularly measuring the return on their total reward investment. Only 20% of respondents currently regularly measure the return on their reward investment.

Other key results

Among the other key findings from the survey are the following:

  • 44% of respondents plan to increase their future focus on using reward to “reinforce a culture of creativity and innovation” – “creativity and innovation” is a current focus for only 25% of companies.

  • 67% of respondents will focus more on improving the ability of their line managers to effectively manage the overall pay-for-performance relationship with employees, and on the role of line managers in communicating total rewards to employees.

  • 57% will increase their focus on managing pay “holistically at a total remuneration level” – as opposed to managing reward elements separately and independently.

“Leveraging important non-financial rewards”, such as career and development opportunities (60% greater focus), improving work climate (53%) and non-financial recognition (52%) will be key components of the reward programmes of the future.

A final word

“The global downturn has prompted organisations worldwide to shift to an increased focus on how to engage and motivate employees. However, during times when budgets are tight, maintaining an engaged workforce is more difficult than ever. When times are tough, employers are looking for ways to improve engagement – and it’s essential they remember the motivational power of intangible rewards, the role of the line manager in establishing a great work climate and the importance of communicating effectively with employees.” - Tom McMullen, US reward practice leader for Hay Group.

Want to know more?

Title: Reward Next Practices, Hay Group and WorldatWork, 2009.

Survey sample: The survey is based on replies received from 763 organisations in 66 countries from a cross section of industries.

Availability: To download the 15-page report in PDF format visit www.worldatwork.org/waw/Content/research/html/research-home.jsp.

Hay Group is a global consulting firm that “works with leaders to transform strategy into reality”. With 88 offices in 47 countries, it works with over 7,000 clients across the world. To find out more visit www.haygroup.com.

WorldatWork is a “global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce”. Founded in 1955, WorldatWork provides a network of more than 30,000 members and professionals in 75 countries with training, certification, research, conferences and community. For more details visit www.worldatwork.org.