Having studied companies closely and analyzed their Employee Reward Systems over a significant period of time, what comes out consistently is that while Rewards continue to remain the core of all Talent Management activities, managing successfully the Employee Reward Programs still remains the biggest challenge with most of those companies.

Some of the key reasons that come out as to why Employee Reward Programs either struggle or fail to live up to the desired expectations in such companies are as follows –

• Rewards not understood by people

  The employees in general are not aware of the process that goes behind the plan, design and delivery of the Reward Programs. The same are also not communicated adequately/effectively to the people, and the engagement/involvement of the line managers are also not sought in the process either. As a result, HR is not able to either articulate or maximize the value of such Rewards to its internal customers.

• Rewards not linked to company’s business

  While planning and designing the Employee Reward Programs, it is often found that HR actually works in isolation or at best with a only few chosen stake holders who they are ‘comfortable’ with, and not in overall alignment with the company’s goals (vision/mission) or its business strategies. The same results in a lack of broad alignment between the employee needs and the employer’s top objectives.

• Rewards not linked to employee performance

  More often than not, it is the ‘perception’ around the intent and efforts of employees, rather than the actual results or outcome delivered that drive performance measures and the rewards associated with the same. Developing clear expectations, creating a clear line of sight, setting achievable goals and establishing a credible measurement system are some of the areas that such companies should focus on. Leading industry research reveals that more than 80% of highly successful companies consistently display certain common attributes like clear/common employee goals and performance based rewards.

• Rewards not linked to the job to be performed

  The absence of a proper Job Evaluation System or well designed Job Descriptions often fail to differentiate between the real job at hand and its worth, as against loosely crafted designations/positions. The pitfall of the same is an incorrect/inappropriate job mapping exercise with the equivalent market jobs, resulting in ‘orange to apple’ and not ‘orange to orange’ kind of job matches, and hence incorrect/inappropriate worth/price linked to such jobs during the hiring of employees and their annual salary reviews.

• Rewards not linked to the labor market

  Those companies which do not track their competition or compare their salary levels with the industry are always at a disadvantage of not paying their employees Market level salaries, and hence losing out in talent attraction/talent retention. It is always wise to get Market Salary Data periodically, and fresh custom surveys providing real time data are the best options, as database study reports have their own limitations.

• Rewards not linked to individual employee needs

  Most of the time, the Employee Reward Programs end up being flat and linear, in the name of standardization and equality. The spectrum of rewards must be flexible/adaptable, as the motivational factors are different for different groups of employees and their respective needs/purposes must be met. While ensuring overall fairness and equity in the system, the way to go is ‘different strokes for different folks’.

  Such companies will need to focus on building their internal capabilities, processes, tools and data to address their Employee Reward Systems in a robust and scientific manner, and ensure that fine balance between employee expectations and business needs for retaining that competitive edge in today’s market place.

Indranil Gupta,
Founder & Principal Consultant,
Meritt HR Consultants Pvt. Ltd.