Line managers and reward strategy


Line managers and reward strategy

“There is constant talk in all personnel departments of the need to educate operating managers in managing people. But 90% of their budget, manpower and effort are devoted to programmes thought up, established and operated by the department.” This was the view expressed by management guru Peter Drucker more than 50 years ago and, according to the latest research from Duncan Brown and John Purcell, many HR departments today still have not taken this warning to heart.


Despite this being the case, Brown and Purcell explain in a recent edition of Compensation & Benefits Review that the situation is not totally without promise with some of the case-study companies they examined managing to successfully translate reward design to effective implementation by front line managers (FLMs).

On the whole, however, the research paints a picture of a significant number of companies not getting it right.

Debate focuses on three issues

In providing background to the subject the study highlights the three main areas pertinent to the issues surrounding reward management design and translation into practice by FLMs. These include:

  • The restructuring of HR functions and devolvement of people management responsibilities to the line.
  • The fact that the role of the first line manager is critical in generating employee commitment and high performance among employees.
  • The gap between the policies and intention of those designing reward strategies and the corresponding skills, training and general interest exhibited by the line managers themselves.

Findings point to a “vicious circle” emerging

The findings are based on information from five in-depth case studies reflecting a wide spectrum of current pay and HR practices and the results of the 2006 CIPD Reward Management Survey, conducted at the time Duncan Brown was Assistant Director-General of the chartered body.

Based on the findings, the authors argue that a vicious circle has evolved with HR specialists doubting the ability of their line managers to carry out reward management policy effectively while, at the same time, not providing the support or training required for such FLMs to operate successfully.

In addition, HR is piling on the administration associated with any new pay strategies or programmes they develop which has resulted in line managers, unsurprisingly, not buying into new systems with failure often ensuing.

The result is reward programmes that "severely curtail the actual pay freedom of FLMs on the ground, weakening their credibility with their staff and continuing to embroil HR in the detailed pay casework and administration that the reorganisations are designed to reduce to achieve stronger strategic focus and impact.”

Some promise emerging

The picture is not totally bleak though, with some of the case-study companies managing to illustrate: “some excellent examples of how individual organisations are successfully leveraging a strong, symbiotic relationship between their reward policy designers and programmes and their application by first line managers, resulting in engaged and high-performing employees.”

Lessons learnt

Using such examples the report explains that these shortcomings are gradually being recognised with some companies providing examples of good practice. These allowed the authors to draw out some general lessons as well as offering advice on how to implement pay strategies via FLMs successfully.

Among such words of wisdom were that companies should:

  • Firstly, involve line managers when developing and modifying reward strategy.
  • Ensure line managers receive sufficient training to implement reward programmes while maintaining HR support for them for when it is required.
  • Don't rush through changes.

In practice, successful companies were devoting additional resources to the operation and communications of reward schemes while more focus on training FLMs was emerging.

Perhaps more importantly, the case-study organisations were involving their line managers and staff in the development and operation of pay and reward schemes to a greater extent, while some were thinking of reward in a broader sense with FLMs also having discretion to offer high-performing staff recognition via informal non-financial avenues such as access to training or other development opportunities.

A final word

“Our research found a strong correlation between employee views of their line managers and their views on the adequacy and attractiveness of rewards. So when considering the relationship between reward practices and business performance, we recommend that compensation and benefits professionals heed the comments of one department manager at a major insurance company we spoke to: ‘It’s the quality of team leaders that’s important . . . it makes a huge difference’.” – Duncan Brown and John Purcell, Compensation & Benefits Review, no. 6, 2007, vol. 39.

Want to know more?

Title: Reward Management: On the line, by Duncan Brown and John Purcell, Compensation & Benefits Review, no. 6, 2007, vol. 39.

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Duncan Brown is a director in the human resource services consulting practice of PricewaterhouseCoopers based in London. He was formerly director of research and government policy with the Chartered Institute of Personnel and Development.

John Purcell is a visiting professor at the University of Bath, strategic academic adviser to the Arbitration, Conciliation and Advisory Service, and a part-time professor at Warwick Business School. He was previously professor of human resource management at the University of Bath and director of the Work and Employment Research Centre.

Compensation & Benefits Review is a bi-monthly publication intended to provide the most thorough and up-to-date information available on issues, trends, and what is working in the marketplace for senior executives who develop and update compensation and benefits policies.