The 7 Commandments for Effective Reward Management

The 7 Commandments for Effective Reward Management

• Review your current reward practices:

  It is important that on a regular basis, you look at your own internal policies and programs which guide all your employee related compensation and benefits discussions and decisions in the organization. For example, conducting periodic HR audits by a neutral team or an external consultant is one of the best ways to do so. This helps you to take an objective view of your position and take any corrective measures, if required.

• Qualify and quantify your own jobs:

  All successful and sustained employee reward programs are based on the fundamentals of a robust job and functional framework. To do so, your organization must have some solid job evaluation process in place, where by each job gets analyzed, described and then compared to the other sets of jobs to result in what we call the ‘worth’ or ‘value’ of those jobs, to which an equitable total compensation will require to be linked from time to time.

• Measure and differentiate outcome:

  Gone are those days, when one needed to ensure ‘equality’ in rewards, based on a more socialistic pattern of distributing money to the employees. We are going through tough and transition times, where a smart employer would invariably look at the return of the employees on their human capital investment. The intent and ability to differentiate both performance and skill levels of the employees, and reward them differently based on ‘differential pay programs’ holds the key for all future business sustenance and growth.

• Benchmark with the competition:

  One of the most unfortunate things that could happen is when organizations stay comfortable within their own shell and refuse to look at what other similar, more successful companies outside are doing. Continuous tracking and benchmarking with the competitors HR policies, compensation levels and benefit programs is a must to ensure that you not only stay relevant, but always manage to have an advantage over the others.

• Create logical internal pay bands:

  Benchmarking and comparing your salary levels with the market through an external consultant will give you current indications of where your salary stands with respect to the comparators. So it is important that you use this market data to create your internal salary ranges or pay bands, based on the performance of employees, their skill levels and maturities in the job. This will ensure both internal equities and market parities with regard to compensation.

• Smartly bundle your pay and perks:

  Your total rewards should have a right combination of elements like base pay, benefits, perquisites, variable pay, stock options and others, to ensure a ‘balanced structure’ for your organization to sustain and scale over longer periods and challenging times. A ‘balanced reward’ is similar to a ‘balanced diet’, and just like a doctor prescribing different diets for different patients, so must your organization have a judicious mix based on the industry type, demographic pattern, geographical location, tenure in business and company performance.

• Communicate with your employees:

  One of the top reasons why reward programs struggle or fail in organizations is that they are not understood by the internal customers, that is the ‘people’. This means, that the employers are not able to clearly articulate the ‘employee value proposition’ behind all their reward intent and efforts. Which makes it even more necessary, that you engage the ‘people managers’ in the entire process and use a blend of different communication channels available to you to reach out to the employees with what lies behind your decisions and what is in it for them