REWARD STRATEGY
Strategic approach remains essential
Rather than deciding to abandon the concept of strategic reward, it is clear that employers are increasingly adopting a strategy of incremental and evolutionary change, writes Duncan Brown in a recent issue of WorldatWork Journal, the prestigious US reward publication.
Criticism of reward strategy concept
The need to use reward to positively reinforce the achievement of business goals is now widely accepted by practitioners. Developing an integrated rewards approach linking business strategy, pay systems and employee behaviour is not always straightforward. A strategy can promise much, but deliver little.
Indeed, this is an issue some academics and pay researchers are most suspicious about. Many are unequivocal on this issue — that recognising this requirement is one thing putting it into effect is hellishly difficult. For the sceptics, pay decisions are short-term, less ordered and opportunistic — they are certainly not long-term, rational and ordered.
A strategic approach is essential . . .
So, should compensation professionals scrap these grandiose plans and return to their administrative backrooms? No, is the only conclusion to be drawn from a study undertaken by Duncan Brown, a principal in Towers Perrin’ s London office.
There is now a genuine belief that people are the primary sustainable source of competitive advantage in the modern economy. So employers are finally waking up to the colossal costs of their most able employees deserting the company. Says Brown: In an increasingly faster moving knowledge- and information-based economy and with a talent war still underway, organisations are limited in their choices. In failing to reward and recognise what makes the business a success, or to change the reward systems as the results shift, then prepare to bid fond farewell to those people and the company’ s success.
Implementing reward changes may be demanding but in a business world where people can make or break an organisation, the options of either doing nothing or deciding that change is too sensitive and difficult to undertake are becoming far more dangerous, says Brown.
. . . but new thinking is required
HR professionals simply cannot afford to remain trapped in the ways of doing things in the past — the reward strategy concept must be transformed, argues Brown.
What then does this new-style approach look like? Brown reckons there are four essential ingredients:
A final word
Organic change, evolution and adaptation are increasingly becoming the characteristics of strategic reward changes today. — Duncan Brown.
Want to know more?
Title: Reward strategies for real , By Duncan Brown, WorldatWork Journal, third quarter 2001.
Availability: Contact WorldatWork, 14040 N. Northsight Blvd, Scottsdale, Arizona, USA AZ 85260, tel: 001 480 951 9191 or email: worldatworkjournal@worldatwork.org.
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Posted 1 March 2002