Reward strategies missing the mark

Jul 03 2006 by Nic Paton Print This Article

Even companies that have been successful in building employee engagement and boosting staff retention are having difficulty getting their staff reward and remuneration structure right.

Research by business advisers, Grant Thornton, found that fewer than four out of 10 (38 per cent) companies recognised as being good employers believe they have a staff reward and remuneration structure which is highly successful.

Around half (47 per cent) felt that their reward strategies were partially hitting the mark, one in 10 (12 per cent) felt they were mildly successful while three of the 100 companies felt that they have no impact on their business objectives at all.

The survey examined the reward strategies of the Top 100 best companies to work for in the UK.

Jim Rogers, head of growth and strategic services at Grant Thornton, said: "We are astounded that only one third of the UK's top 100 best companies to work for believe that their reward and remuneration strategies are highly successful in terms of aligning staff rewards with business objectives.

"We had expected this figure to be much higher in these companies. Perhaps, despite their success, they are still missing a few tricks in terms of making the best use of the various incentivisation tools available," he added.

"Thankfully however, of those surveyed two thirds (66 per cent) said that they would review their reward and remuneration strategy over the coming year," he continued.

"As without success in this crucial area of management it will clearly be a struggle to incentivise staff performance in line with business objectives, create a positive attitude amongst staff, attract high calibre employees or retain existing staff – all of which drive the creation of these policies in the first place," he concluded.

The survey also asked employers to identify the most popular rewards in their organisations.

Flexible working time led the way, with 89 per cent allowing their staff to take up such benefits, followed by formal recognition/awards (86 per cent), ad-hoc benefits such as Christmas parties (79 per cent), performance-related bonuses (78 per cent) and extra holidays (74 per cent).

Interestingly, incentives such as the provision of life assurance, an increase in basic salary and maternity or paternity benefits (above and beyond the legal requirements) now seem to have been taken for granted as part of normal remuneration packages by staff, so are no longer seen as being particularly generous.

Alysoun Stewart, director of growth and strategic services at Grant Thornton said: "Information about the most popular methods of rewarding staff is invaluable and should be looked at closely by those who do not offer some of the less obvious benefits to their employees.

"It is also essential that employees understand that these add-on benefits are genuine rewards that do come at a cost to their organisation," she added.

Despite the recent Turner Report and warnings about changing demographics placing a strain on the state pension, the survey showed that pension provision was not considered as particularly effective or popular as a reward mechanism.

In fact employers felt that formal recognition for their staff (52 per cent) was better received by employees than pensions (50 per cent).

"The lack of emphasis on pensions is a cause for concern, especially as this probably represents the biggest (and arguably the most important) single investment an individual will ever make," said Stewart.

"The lack of importance is likely to be a reflection of the wider apathy to pension provision, which the Government is desperately trying to change," she added.

Another finding from the research was that gone are the days of hierarchal management structures, where colleagues do not socialise and employees are "suited and booted".

The vast majority – 95 per cent – of the businesses surveyed said their people had fun at work and three quarters enjoyed a drink together regularly in comparison to only 5 per cent who said they rarely socialised with their work colleagues.

Workplaces were also found to be quite relaxed with people being trusted to get on with their jobs in 92 per cent of businesses – more than twice the number who did not allow their employees to do things without proper authorisation (45 per cent).

More than half the businesses surveyed had a flat structure with only 33 per cent having a strict or traditional hierarchical structure.

Beyond reward strategies, the survey also identified that more than half of the UK's top 100 best companies to work for said that people in their business were dressed casually, more than three times those who had a strict dress code.