We are often asked ‘what is a reward strategy’. It covers a wide range of areas.
Reward strategy involves designing and implementing reward policies and practices which are most likely to support your organisations objectives, delivering a motivated and effective workforce.
Often an organisation’s pay and reward structure has evolved without any overall goal, sometimes allowing bias and unequal pay issues to creep in. However, applying a strategy to your pay and reward can deliver real benefits for the organisation, the workforce and your business. A pay and reward strategy is something the CIPD recommend employers undertake.
Why does my organisation need a reward strategy?
We all want to work in an environment where we feel we are truly making a difference, one that encourages us and makes us feel appreciated.
We also want to work with a leader who takes the time to develop and inspire us – recognising our efforts.
The right reward strategy can help you achieve this for your employees, using benefits, bonuses and pay to encourage employee loyalty. Motivated staff will go that extra mile to contribute towards organisational success and better results. A successful environment will inevitably attract new talent, make existing employees feel rewarded and help retain your key people.
A reward strategy that reflects the culture of your organisation will enable you to achieve your organisational strategy and objectives. Extensive research in the industry has shown that having a defined reward strategy will help organisations attain better financial results than those organisations that choose not to have one.
What should a reward strategy consider?
A good reward strategy will consider more than just pay, so it is important to do more than scour the local press to find out what the market is paying.
Organisations can get just as much, if not more, out of non-financial rewards as from financial ones.
A total reward approach looks at what your organisation is trying to achieve, what your people want, what is affordable and the structures needed in place to achieve this. The four areas covered are:
- Cash compensation
Every organisation must pay its employees for the services that they provide (i.e. time, effort and skills). This includes both fixed (salary and allowances) and variable (bonus and incentives) pay. The cash compensation provided to employees increases over time and can be linked to a number of different factors such as performance or career development.
Organisations use benefits to supplement the cash compensation they provide to employees. These vary depending on the size of the organisation and affordability but can provide security and comfort to the employees and their families. The benefits include holidays, medical cover, income protection and pension schemes.
- Personal Growth
Providing personal and professional growth opportunities to employees is an essential part of any reward strategy. These can be skills acquired on the job as well as formal training programmes valued by the employees that also serve the organisations strategic needs. Alongside this development, however, is the need to manage expectations, assessing performance and constantly striving to improve.
- Work Environment
A positive work environment can often be the defining factor in retaining key talent in an increasingly competitive market. Ultimately, we all want to work in an environment where there is genuine feeling of team spirit and togetherness. With a leader that inspires and supports us to achieve success at both work and home.
Working with a Pay and Reward Consultant
Many businesses will work with an external provider to help them put a reward strategy in place.
An experienced pay and reward consultant, such as 3R Consulting, will have experience in reward strategy covering a wide range of organisations and business types. To see how we have already helped other companies, please click here.
To learn more about putting a reward strategy in place in your organisation, please click below.