During these tough times the question around how to keep the troops motivated is on everyone’s mind. The HayGroup’s latest study reveals how rewards can boost engagement.

The latest study: World at Work has given some great insights into the reward practices companies are planning in the future. Of the 763 organisations surveyed in 66 countries across a range of industries, over half are planning to increase their focus on employee engagement in their reward programmes during the next two to three years. A further 64% will increase their focus on the motivational value relative to other objectives such as ensuring competitiveness and internal fairness.

But for reward professionals it is no easy task to keep employees engaged and energised when reward budgets are tight. HR will need to dig deep into their tool bag to find more creative ways to keep employees motivated. At the same time they must ensure that rewards continue to remain aligned to the needs of the organisation.

This article draws on the findings from our study to provide some practical insights into how organisations can, and are planning to change their reward programmes to more effectively drive engagement.

Understand what the employee wants

So where do we start to make this change? The first step is to understand what individuals in the organisation value. The most effective reward strategies strike a balance between the needs of the company and the needs of the employee, and this means involving employees in the reward programme design. This is most likely to take the shape of a regular employee survey. As one organisation we spoke to said, “The real power is when you actually start talking to your employees. We design our reward programmes, invest in new programmes and beef up current programmes based upon the feedback we receive from them.”

Measure for engagement

We are also starting to see organisations shifting performance metrics to measure for employee engagement. Our study showed that current reward programme metrics are most heavily weighted towards financial performance with 71% of companies reporting that they use primarily financial metrics. Other performance measures such as customer satisfaction, innovation and talent management are all given less priority, and only 40% of companies indicated that they are currently focusing on measuring line managers for increasing employee engagement. However, the study found that, while financial performance will still be king, 57% of organisations plan to put a more intense focus on measuring employee engagement in the future.

Focus on the intangibles

The study also reveals that organisations are realising the motivational power of intangible rewards including non-financial recognition such as, career development opportunities, the quality of work and the line manager’s role in generating a great working environment.

Intangible rewards drive an organisation’s employment brand, and are one of the most important vehicles in attracting and retaining talent. But they are often a big miss for organisations, primarily because the HR function doesn’t ‘own’ them and in some organisations no one does.

Yet this looks set to change as a significant percentage of organisations in our study will be placing a greater focus on a range of intangible rewards which include: career/development opportunities (60%), work climate/culture (53%), non-financial recognition (52%) education and training programmes (50%).

Invest in line managers

In order to ensure that organisations get the most value out of their intangible benefits the role of the line manager is critical. Managers tend to have the most influence over the array of non-financial rewards that the organisation provides; in fact they are often the lead influencer in an employee’s engagement with the organisation. Hay Group’s retention studies over the years show that, when it comes to voluntary employee turnover, people tend to leave bad bosses rather than bad organisations. The research also shows that team leaders have a direct impact on the climate experienced by their team which can impact on performance by up to 30%.

But, in our experience line managers do not get the attention they deserve. Organisations need to help them develop the skills and behaviours they need to motivate employees and implement effective reward programmes. Given their influence the payback of investing this time will be sizeable in terms of employee engagement.

Communicate, communicate, communicate

However, managing the intangibles isn’t the only focus for line managers. The key to engaging and motivating employees will be the way line managers and senior leadership communicate their reward strategy. More often than not, employees can feel de-motivated because they do not understand how reward links to their performance or the true value of their package. In the past, the onus of communicating reward has often fallen at HR’s door, however, our study shows this is where the biggest shift will be in terms of current and future focus. In the future, reward communications will become more the responsibility of managers and senior leadership with 67% of organisations planning to put the emphasis on managers communicating total rewards – compared to only 15% currently. Again, for this to work it is imperative that HR helps managers and leaders to learn how to communicate rewards more effectively, with additional training, tools and one-to-one assistance.

The impact on the reward professional

So, the need to engage employees in a recession through reward will provide a clear focus for HR and in particular, reward professionals, specifically covering:

• Communications: Sustained communication of the entire reward package with reinforcement of key performance messages will be critical
• Educating and coaching line managers: Line managers play a critical role in communicating reward and performance. HR must coach and educate line managers on how to best communicate this to their employees
• Differentiating rewards: In coaching line managers, reward professionals need to make sure top performers are being rewarded appropriately and poor performers are getting the ‘tough love’ they need
• Intangible rewards: Intangible rewards will play a bigger role in attracting and retaining talent and reward professionals will need to engage directly with their organisation to shape how they are managed and communicated