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Getting your just reward. By Louise Druce

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Treasure chest of rewards

Hard work can be worth it simply for the perks of the job but how can employers be sure they are offering the right incentives to staff? Louise Druce finds out that there’s more to reward schemes than a token pile of cash – although sometimes that would be nice too!




Job perks can often sway the balance when deciding whether to take on a new role but employers are now shelling out on staff reward schemes to retain staff they already have, as unmotivated workforces and high turnover rates prove a costlier drain on resources, running into billions.

Measuring effectiveness and employee engagement

  • Higher levels of productivity logged onto admin system.

  • Positive personal responses from staff at performance reviews.

  • Observation of office dynamic by senior members of staff.

  • Increase in initiative and teamwork amongst employees.

William Berry, managing director, Net121

The thorny issue is identifying where and when reward schemes are appropriate, and choosing add-ons that prove beneficial for both employer and employee. It’s not simply a case of offering a token pay packet boost.

“Companies should be encouraged to understand that people have different needs and many are surprised to learn that people are not purely motivated by money,” explains Ian Rummels, founder and managing director of employment specialists PES. “Many employees would welcome a salary sacrifice, whereby they exchange part of their salary for, say, gym membership, childcare support or extra holiday. Others may appreciate flexible working hours, whether through completing core hours with flexible start and finish times, or through a job share.”

Finding the treasure spot

Before tackling the issue of what rewards would suit best, Rummels argues the first step to dealing with a motivational problem is understanding there is a problem in the first place. This can be identified through reviews of the company culture as well as the people. For example, management might have a very different view of the business than the rest of the workforce and an evaluation will highlight these discrepancies.

Once the areas that could benefit from rewards have been identified, firms need to look realistically at what they can offer. There are many options and not all extra perks equate to extra costs. In fact, they may even save money, Rummels argues. For instance, the childcare voucher scheme his company runs is exempt from national insurance.

Richard Purchase, chief executive of Insight Human Resource and Management Consultancy, says the vast majority of his clients are moving towards ‘total rewards’, which take into account the whole renumeration bundle. It functions as a ‘menu’ of benefits, such as the ability to buy or sell annual leave, discounted gym membership, flexible working or the opportunity to enhance pension arrangements by private health care; written into a package that employees can select from.

“Companies should be encouraged to understand that people have different needs and many are surprised to learn that people are not purely motivated by money.”

Ian Rummels, founder and managing director, PES

“The most important thing is to see it as a total package and not to cherry pick your way through as it becomes very expensive and ad hoc,” he warns. “You have to look at salaries, terms and conditions of service and contractual arrangements, and not piecemeal.

“The second issue is you have to be clear about what your cost envelope is. The difficulty for employers is it’s very easy to put things in a package and if there is a very high take-up, the costs can run away with you.”

The issue of cost is particularly pertinent for smaller companies, which may feel unable to afford expensively elaborate flexible packages. But, again, they do not necessarily have to be expensive and complex.

“By introducing an element of flexibility with, for example, childcare vouchers or extra holiday days, the positive impact on staff satisfaction and retention can help save money overall,” says Malcolm Bond, a reward consultant at PES. “While smaller and medium-sized businesses may not always be able to compete with larger companies in terms of salary and expensive benefits, by offering choice and a little bit of imagination, less cash-rich organisations can become ’employers of choice’. People will often choose the correct work-life balance over a little extra cash.”

Where’s the incentive?

Implementing schemes effectively

  • Make sure they’re not just monetary; this may lead to a culture where work is not done if not rewarded.

  • Transparency is paramount. Everyone must know who is being rewarded and why.

  • Understand what motivates each member of staff and put in a framework that will suit them.

  • See the bonus to motivate. Too high, it’s not achievable and de-motivating; too low and it won’t motivate at all.

William Berry, managing director, Net121

Web communications agency Net121 has a number of elements in its employee incentive scheme. They include performance-related cash bonuses, the use of the company car at weekends by the employee of the week and use of the company allotment, as well as subsidised gym membership and staff social days out after high performance months.

It states five key reasons for initiating bonus schemes: having a realistic knowledge of how to increase productivity through tailored staff psychometric tests, to foster an atmosphere of friendly competition, to provide concrete financial and psychological rewards to encourage individual effort, to provide employees with measurable goals and self-assessment methods, and to increase productivity in an ‘organic’ and cooperative way.

“As our business develops at a fast rate, the requirement for good, enthusiastic and company-minded employees has become more and more vital,” explains William Berry, managing director of Net121. “We are realistic and understand that to gain and retain the best staff we must provide something different for our employees.

“We introduced reward schemes not just to incentivise staff into performing exceptionally but to reward the employees who achieve great things within the company. We work hard to create a culture of transparency where people feel rewarded with experiences and monetary bonuses but also by the feeling that they have been recognised by their colleagues for their hard work.”

2 Responses

  1. To Reward or not to Reward
    Louise,
    We come from different starting points.
    Your first assumption seems to be that reward schemes work and that if they don’t appear to be working then it is because we are using the wrong scheme.

    My own position and that of W Edwards Deming, amongst others, is that reward schemes don’t work.

    Deming said that we should get rid of the extrinsic motivators, rewards schemes, and instead concentrate on the intrinsic motivators.
    Instead of looking for the rewards that we can use to buy loyalty trust or motivation we should be looking for the behaviour that will earn these qualities.

    Think about the reasons that we marry, is it because someone buys us a ring? Or is it because someone changed the way that we felt about them.

    The manager is responsible for the way that the workforce feel about what they do, the way that people feel about what they do is a result of their managers behaviour.

    It is easy for the managers to blame the workforce because people listen to the managers voice and assume that when he blames the workforce they are to blame.
    The reality is that 95% of people leave their jobs because of the behaviour of their manager, but the manager never finds this out because when the employee leaves he still wants a reference, his notice pay and benefits which, if he tells the manager the real reason he is leaving, he assumes will be delayed or blocked.

    Because the workforce are always blamed for failure does not mean that it is always their fault.

    When the manager learns to give his workforce trust and respect is when they will start working for him, not when he bribes them with membership of the golf club.

    Thank You
    Peter A Hunter

    http://www.breakingthemould.co.uk
    http://www.hunter-consultants.co.uk

  2. Reward Schemes
    I really like reward schemes, well crafted, and I fully support the suggestions offered.

    Most especially, I fully agree they do not have to be financial rewards. (Of course cultural expectations come into this; geographic, sectoral and functional.)

    Part of the problem for employers is you get what you reward. So if you have a bonus scheme based on sales volume, for example, you may get more sales but lousy margins. If you reward an admin team for fewer mistakes, you may get greater accuracy but awful turn-round and output.

    More, if individuals can’t influence the outcomes they are measured on themselves, bonuses become meaningless – and still expected.

    If participants in any reward scheme find the targets incomprehensible (it happens! – often), achievement becomes a lottery and a misguided missile.

    And if any financial rewards become disproportionate to base salary and core living costs, they can distort good business practice and ethical judgements. As any reader of the financial press will know!

    So if you are looking to incentivise your workforce, do focus first on the ‘hygiene factors’ – including security, meaningfulness, self-determination, affiliation, fairness, opportunity, culture and climate – just for starters?

    For example, do your colleagues all know what they are doing and how to do it? Even better, do they understand *why* they are doing it and why any changes may be necessary other than ‘random management whim’, as they may perceive it? Do they know when they are doing their jobs really well and when not – and why? Do they have targets they actually subscribe to and get feedback on; and do they feel feel suitably appreciated, involved and included? Do they even embrace your core objectives and values , and observe transparent equity and opportunity for all?

    Not rocket science at all, of course!

    Some ‘high-output’ organisations feel they *have* to offer significant financial incentives to attract stong performers (eg selling financial and consumer insurance services in ‘distress purchase’ markets?); and some employees *need* to be rewarded by each milestone achieved. Each to their own say I, although I observe unusually high labour turnover in both categories – which you may think could be counter-productive? (You may also think they might be more acutely conscious of what their propsective customers want? Did you ever meet a purchaser of a time-share, new bathroom, kitchen or insurance policy positively delight in buying from bonus-driven sales people who may be gone tomorrow??)

    Just some random thoughts, to add to Louise’s. I hope helpful?

    Jeremy

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