REWARD MANAGEMENT
Little evidence that organisations monitor and evaluate changes in reward practices
All too many organisations fail to evaluate the effectiveness of their new reward practices once they have been introduced. They either accept them as an article of faith or give up on the grounds that it would be too difficult. That's the main message to emerge from a major study by researchers at the University of Greenwich.
This 80-page study is based on data from ten NHS trusts in England which had introduced some innovations in pay and grading in the 1990s. The researchers also looked at seven multi-site unionised organisations outside the NHS in both the public and private sectors which had recently made changes to their reward systems.
NHS trusts fail to evaluate reward changes
The objectives of the changes made by the NHS trusts varied but there were come common threads: affordability, simplicity, flexibility, the reward of good performance and the overcoming of recruitment and retention problems. However, little rigorous evaluation of the new practices against these aims had been undertaken by the NHS trusts.
As the University of Greenwich researchers explain: "Although trusts collected much HR information, for instance labour turnover statistics, and carried out staff attitude surveys, essentially they did not use the data to evaluate their pay systems or make use of a control group (i.e. staff who had not moved on to the new pay system). Some trusts, however, conducted certain one-off exercises to evaluate a specific aspect of their new pay arrangements."
"Modicum of evaluation" found in non-NHS organisations
Although the organisations outside the NHS routinely gathered a considerable amount of HR data, "they used only some of the data to measure the impact of their pay system against the stated aims and, like the NHS trusts, most conducted only a modicum of evaluation". The exceptions were Customs & Excise and Royal Mail.
Reasons for lack of evaluation
So why is evaluation so rarely carried out? The researchers put forward a range of reasons:
Private sector interviewees said that profitability was too dependent upon external factors for financial indicators to be a useful measure of a pay system.
The evaluation process was seen as something of a headache. As the report puts it: "Rigorous evaluation is a methodologically complex process: in a business environment it is virtually impossible to keep all the internal and external variables constant except a reward system and prevent other changes taking place at the same time in the organisation."
New pay systems were often introduced at a time of widespread change, so it was often difficult to disentangle the impact of various initiatives.
Many desired outcomes from a change in a reward system, such as improved employee commitment, are inherently difficult to measure.
The link between reward systems and organisational performance or customer satisfaction is not direct. "Even if it is possible to show that there is an association, e.g. the new pay arrangements lead to an improvement in employee morale, this does not equate to a causal connection," says the report.
Managers are busy people and evaluation carries a considerable cost -- exit interviews are time consuming, and a rigorous attitude survey is not cheap.
Organisations have little incentive to evaluate. Says the report: "After spending a long time developing a new reward package, managers are likely to have a psychological investment in its success and may be unwilling to delve if there are no apparent problems."
Want to know more?
Title: Does it Work? Evaluating a New Pay System, by Susan Corby, Geoff White, Paul Dennison, Fiona Douglas, Jan Drucker and Elizabeth Meerabeau, University of Greenwich.
Availability: Contact Susan Corby at the University of Greenwich, tel: 020 8331 8200 or email: s.r.corby@gre.ac.uk.