- Employers have had to quickly amend their benefits approach to best support employees working through challenging circumstances.
- Recent times have shown us how important resilience is and the ability to cope with change swiftly, so why shouldn’t that translate to reward strategies as well?
- Constant change to an underlying philosophy would be quite challenging and could easily undermine an employee’s perception of their employer.
During the past year, most reward strategies have been extensively tested, requiring employers to quickly amend benefits approaches to best support employees working in challenging times, which raises the question of how much of an impact change can have on a reward philosophy.
The impact of change
A robust reward strategy and wellbeing programme can help staff navigate through changes. Debra Clark, head of specialist consulting at Towergate Health and Protection, believes it could help employees to feel valued and appreciated. “When [employers] build a reward strategy it should link very closely to a business’ culture [and] values. It’s important that organisations don’t do this as a tick box, they need to think about their values and what they are trying to achieve, and it should be supported from the top down. Change doesn’t necessarily help or hinder a business; [employers] need to build it into their strategy in terms of recognition, reward, a focus on wellbeing, or whatever their strategy entails,” she says.
Organisations were forced to react very quickly during the Covid-19 (Coronavirus) pandemic and are now faced with new demands from employees regarding the ways in which they now work. A strong reward philosophy will make managing change easier because it provides a framework against which decisions can be made in a consistent manner. “Regardless of how things change in the business, a good reward philosophy should not need to constantly change, even if what and how reward is delivered may change,” says Charlotte Godley, head of proposition at Benefex. “A reward philosophy should be the guiding principles on which any reward strategy is delivered, but this does not need to dictate exactly how these should be delivered or what should be provided. This will change based on market trends, what providers are offering and what employees need.”
Flexibility in delivering benefits is something that has been seen for a few years already. Eva Jesmiatka, director of rewards at Willis Towers Watson, notes that offering flexibility and the ability to adapt quickly to things is something that has come up frequently in reward approaches. “Being able, as an employer, to offer more flexibility and choice has had a big impact and is something that people appreciate having. Flexibility has become part of our broader lives, as staff are looking to tailor rewards and benefits to their needs. The programmes themselves aren’t constantly changing, it’s more that it offers flexibility so people can adapt it to their unique situation, and they can realign it if their circumstances do change,” she says.
Reward strategies have not always been subject to constant change but due to the challenges of the past 18 months, many employers have reassessed their principles.
Stuart Hyland, associate partner at Aon Rewards Solutions, says he has seen a significant strengthening of the physical, emotional and financial wellbeing elements of rewards. “The core philosophy remains a constant, albeit with a change in emphasis, although there has clearly been a lot of activity going on to determine the most relevant ways of delivering it to employees in way that continues to add value.
“Constant change to an underlying philosophy would clearly be quite challenging; it could easily undermine an employee’s perception of their employer as it would represent a pretty radical shift in how an organisation wanted to define its values and culture,” he says.
Agile organisations
Coronavirus has accelerated the need for employers to adapt to more agile ways of working and highlighted the need to be resilient. The move to greater agility can affect reward strategies, as it requires a different way of thinking about structure and collaboration.
David Wreford, partner at Mercer, believes that this is applicable to jobs that are have fixed locations and working hours, those that offer flexibility, or somewhere inbetween. “Fixed is reasonably traditional and can rely on structure for levels or grades, pay ranges, tiered benefits, bonus targets and appraisal outcomes. Where these structures dissolve, as they need to for flexible working, then [employers] can rethink the determination of rewards and the basis on which pay progresses and bonuses are awarded, including performance management systems.
“It is a shift away from pay-for-performance towards pay-for-skills, from incentives for individual performance and collective achievement, and from longer-term incentives to tie in high potential staff,” he says.
Employee value proposition
Can an agile reward approach support an organisation’s employee value proposition? Clark very much thinks it can and it should. “When building a reward approach, [employers] should start with [their] brand, values and culture, and then scale it down into what [they are] rolling out to employees. [They] want an agile reward approach but it still needs to be fair and equitable. Maybe having a reward philosophy that changes is something that we’ve all got to accept now. Recent times have shown us how important resilience is and to cope with change and be agile, so why shouldn’t that translate to reward as well?” she asks.
An organisation needs to live and breathe its reward philosophy for it to really support the employee value proposition. For example, Godley explains that an organisation can’t have a reward philosophy to support diversity and inclusion and do nothing to close the gender pay gap. “Not practising what you preach can not only render a reward philosophy redundant but will also break the trust between an employee and their employer. Set a reward philosophy that reflects values and goals, then, develop the reward strategy to determine how that strategy will be delivered. The actions may change, but decisions made about the delivery should always adhere to the overriding philosophy,” she says.
If an organisation adjusts its reward approaches in response to evolving employee needs, then its employee value proposition will shift accordingly.
Hyland is of the opinion that if an organisation keeps its reward approaches fixed in the face of changes, then their employee value proposition could still change as perceptions move. “Organisations need to ask themselves which type of shift will best reflect who they want to be, which will help them to retain and attract their key employee demographic. In this sense, a shift in reward approaches will not undermine an employee value proposition but will instead help to shape, confirm or evolve it,” he says.
If the reward philosophy is strong and aligned with an employer’s values, it shouldn’t need to change often and should reflect the organisations’ longer-term business strategy. It is the way in which it is delivered that needs to be agile.