Duncan Brown: Reward professionals should focus on four areas

In 1957, The Times reported on a debate about MPs’ pay and expenses. Press headlines in recent weeks have induced a sense of d»j‡ vu in terms of the economic situation. Although we can learn from the past, we need to reinterpret those lessons in our human-capital-driven and talent-scarce economy. Reward professionals should focus on four areas as we enter more challenging circumstances.

First, enhancing pay for performance. This has been a controversial issue since the piecework systems of the Industrial Revolution. But in an economy in which David Beckham’s annual shirt sales can cover his multi-million-pound salary, we have no choice. The question is not whether to link reward to performance, but how to. We must look beyond uniform, simplistic systems of merit pay and link employee contribution to employer-added value. And do so in ways that suit modern organisations and performance demands, such as team rewards and bonuses reflecting contribution.

Second, we must pay more attention to equal pay. With the new Equality Bill unveiled last month, and no-win, no-fee lawyers increasingly looking to the private sector for business, it is essential to ensure that pay differences are justifiable and non-discriminatory.

Third, employee engagement is vital. It is now a decade since the original Sears research (Heskett J, Jones T, Loveman G, Sasser W & Schlesinger L (1994) “Putting the Service-Profit Chain to Work”, Harvard Business Review, March-April, 164-174) demonstrated employee engagement is critical to corporate performance in our knowledge and service-based economy. Most organisations today survey employees’ attitudes, but few are able to show how their rewards can best engage staff to deliver high performance.

Fourth, as cost pressures intensify, effectiveness is key. HR has often been accused of making decisions based on imperfect information and being faddish. We need to link and interpret information on costs, attitudes and HR metrics to demonstrate the return on investment in people.

In these four ways, reward professionals can demonstrate their contribution in uncertain economic times.

Duncan Brown, director of human resources services at PricewaterhouseCoopers