Duncan Brown: Are employees becoming more influential in driving benefits strategy?

Any self-respecting director of reward will say: ‘Of course. We offer them a flex plan, don’t we (even if take-up is often low); and do lots of interesting generational analysis of our staff engagement survey results (even if we rarely do anything in response).’

There is a long history of research, from the Hawthorne studies in the 1920s onwards, demonstrating that employee involvement has a huge influence on the performance of employers and the acceptance and outcomes of their reward plans. Michael Armstrong and I found that the success of pay and benefits changes was closely related to levels of employee communications and involvement in those reforms.

Yet, responding to those couple of questions on pay and benefits in the annual staff survey and undertaking the horrendous annual flex enrolment process is as involved as most employees get in their reward strategy. The decline of union bargaining influence in the private sector has not been replaced by any alternative involvement vehicles in most cases. Indeed, I generally find employers resistant to my suggestion to run focus groups to canvass staff views on benefits and rewards before making any changes, fearing that it might ‘set hares running’.

I like Ed Lawler’s definition of incentive plans as “pay schemes designed to involve employees in improving performance”. He advocates employee groups to design plans, and letting employees decide how to share out any payments earned. It goes very much against the modern grain of over-engineered, multiple-objective and measures-based plans, even though management by objectives (MBO) approaches have very little evidential basis.

Yet, in cultures where employees suggest measures to improve performance and get told to shut up and get on with their work, then no incentive plan is going to work. We all need to genuinely open up our reward and benefits strategies to our employees if they are ever to realise their potential performance impact.

Duncan Brown is head of HR consultancy at the Institute for Employment Studies