REWARD MANAGEMENT
Towers Perrin finds evidence of "third way" in reward
A "third way" in reward practices is spreading across Europe, according to research by Duncan Brown, principal in Towers Perrin's London office.
More and more businesses are now fusing traditional approaches — such as profit sharing and job evaluation — with newer variable and competency pay models to produce practices that best suit their own needs and cultures.
In an article for the US reward journal WorldatWork, Brown writes: "Towers Perrin's European rewards study provides strong evidence to suggest that this process of international and philosophical fusion, of companies picking and tailoring the best approaches to suit themselves, drawing from old and new, individual and collective, Anglo-Saxon and Continental practice, is well under way."
Strategic alignment
The Towers Perrin study suggests that organisations based in Europe are questioning and, in some cases, abandoning traditional, national employment norms.
But what's driving these changes? It's certainly not tax and employment legislation, says Brown. Nor are businesses faddishly following the "new pay" practices extolled by American reward experts.
As his article points out: "Many of the more radical 'new pay' approaches such as broadbanding and pay-at-risk remain very much minority practice in Europe."
For Brown, it's a desire for better strategic alignment that is the main catalyst for change. Companies are developing arrangements that better support the achievement of their own strategic business goals, and fit their own unique cultures and environments.
"Focusing employees on business goals and customer need is the primary driver of current changes to pay and benefits," says Brown.
Trends in reward strategies
Organisations are following "one or more of three parallel and concurrent courses within their reward strategies", according to the Towers Perrin research led by Brown:
Updating and reforming traditional and often long-standing arrangements — notably job evaluation systems, recognition programmes and profit-sharing arrangements.
Introducing newer compensation techniques — such as flexible benefits, broadbanding and team rewards.
Creating tailored, hybrid approaches — the basic apparatus of job evaluation is being retained but with modifications to take account of skills and competencies; pay structures with fewer grades and wider pay ranges are emerging; and there has been a growth of multi-tiered bonus plans.
Want to know more?
Title: "The third way: the future of pay and reward strategies in Europe", by Duncan Brown, WorldatWork Journal, second quarter 2000.
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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Visit Towers Perrin online at www.towers.com
Take a look at Duncan's feature article for e-reward.co.uk, "Reward challenges and changes in Europe".