Throwing money and extra benefits at workers is only effective if line managers get proper training in how to communicate their advantages, new research has suggested.
A study by Britain's Chartered Institute of Personnel and Development has found more than half of employers believe lack of skills and the abilities of line managers limits the effectiveness of pay and benefit strategies.
Its Reward Management Survey 2006 also found more than a third – 36 per cent – felt insufficient communication was one of the key problems and a quarter believed the attitude of line managers was at fault.
At the same time, the CIPD has warned that an historical lack of flexibility in reward strategies in some parts of the public sector could restrict the chances of achieving efficiency and service delivery improvements.
The public sector was leading the way on equal pay and so was well placed to recruit from a wide talent pool, as organisations were more likely to have carried out an equal pay review than their private sector counterparts.
More employers were making sure equal pay reviews were carried out regularly and including variants other than gender, such as age and race.
But when asked if their reward strategy was "flexible enough to change when circumstances require" public sector employers rated their own reward strategy lowest with an average of 2.61 (where four is agree and one is disagree), compared with 3.18 for private sector services.
Charles Cotton, CIPD reward adviser, said: "Inflexibility can create a barrier to achieving business objectives and cause recruitment and retention problems. This can lead to the reward strategy becoming misaligned over time with business objectives."
Across the board, in both public and private companies, when it came to pay and reward strategies, employers commonly failed to give line managers enough responsibility for determining total reward yet expected them to communicate them to staff.
"More involvement of front line managers is needed – both in terms of determining the non-financial benefits (such as training and development and flexible working) and financial aspects of reward, such as pensions and bonus awards," he explained.
"This will enable them to understand the pay and benefit strategy and then implement and communicate it effectively," he added.
Fewer than a third of organisations were using recruitment and retention as a factor in determining pay award.
But employers were increasing the use of benefits, with 46 per cent planning to introduce new benefits in 2006 compared with just 16 per cent in 2005.
New benefits were often government-inspired tax advantaged childcare vouchers, bike loans and home computers, the CIPD added.
"It is encouraging to see employers investing in employee benefits. These perks can be important and can help business in terms of recruitment, retention and motivation," said Cotton.
"However, they will also fail to help if employers continue to ignore some of the pivotal problems surrounding the effectiveness of pay and benefit strategies such as line manager involvement.
"The key is for reward practitioners to get closer to their line mangers by giving them the support and training that they need to implement effectively the organisation's pay and benefits polices and practices and to communicate what employee behaviours and performances the organisation values and how it will reward them," he concluded.