Years of research have focused on designing successful reward programmes that keep employees engaged and productive. But most are missing a key trick because one critical audience - the line manager - is often overlooked.
That's the message of a new book, The Manager's Guide to Rewards, co-authored by Hay Group consultants, Doug Jensen, Tom McMullen and Mel Stark.
"The current reward system is broken in many organisations - companies need to focus more on the 'how' than the 'what,'" said Tom McMullen.
"The most well-designed employee rewards programmes fall flat without proper execution. Line managers, who ultimately serve as the face of an organisation to its many employees, are typically the ones who can make or break their success."
So why are line managers so important? Put simply, while many organisations focus on monetary rewards for motivating employees, intangible incentives such as job design, career development and the work climate Ė all of which are heavily influenced by management behaviour Ėalso have an enormous effect on employee engagement.
The most successful managers, the book argues, are those who recognise and use a variety of tools to reward employees - from linking specific performance measures with larger goals for the organisation, to recognising and rewarding valuable employee contributions, to clearly defining job roles.
In fact, Hay Group research has shown up to 30 per cent of variance in business results can be explained by differences in the work climate created by managers.
"Managers who are able to create an all-around engaging work climate can have an invaluable effect on an employee's commitment to a company and the productivity a group of employees can generate," said Mel Stark.
"Human resource executives and line managers must work hand-in-hand to create these positive environments," he added.
"In turn, managers can provide insightful feedback on the possible benefits and risks of different rewards programmes."
Managers are also a vital component in delivering intangible rewards like flexible work hours, career growth, recognition, leadership and job enablement, the book argues.
"Competitive pay and benefits gets you in the game but it's no guarantee you'll win the race," Tom McMullen said.
"It's the intangibles that are hardest things for competitors to imitate. One of the most surprising things we learned while developing the book was the prevalence and density with which employees cited these non-monetary issues as being most valuable to them. This is also a key area where managers can make a significant and positive impact."
His suggestions for ways that managers can foster a better work environment are simple but often overlooked.
Recognising employees for some of the everyday things that often go unnoticed , providing feedback and coaching on how individuals can do things better and looking for opportunities for staff development will all reap big dividends..
And Mel Stark added that managers should also be clear about the cultural attributes the company seeks to encourage, support and reward.
"Career development is one aspect of the reward system that both employees and employers typically breeze over," Stark said.
"Designing and implementing a finely-tuned career development programme can be a time-consuming and laborious investment for companies, but this type of dedication and long term commitment to people lends itself to rewarding experiences for the workforce and payback for the company.
"Employees are more likely to stay in organisations that say they care about their people's development and really do something about it."