With total reward, it’s not just about what you do, but how you do it

Research that shows total reward helps meet organisational goals is a little thin, but there is a strong suggestion that high-performing firms use perks to help generate a positive environment that feeds through to customer service.

When the author JB Priestley travelled on his English Journey in the mid-1930s, he was amazed by the working conditions at the Cadbury factory in Bourneville. He witnessed “magnificent recreation grounds, a large concert hall, with continuation schools, medical attention, works councils, pensions…”.

But it didn’t have a flexible benefits plan. Listening to the siren voices of vendors now operating in the market, employers would appear to be totally outdated if they somehow fail to possess one. According to the results of research by Hewitt Associates last year, 75% of the 150 organisations surveyed do (if generally of a fairly limited variety).

Almost one-third of organisations in the Chartered Institute of Personnel and Development’s annual Reward management survey 2006 claim to be pursuing a total reward strategy, with the predominant objectives of cost-effectively reinforcing business goals, and meeting the individual needs of an increasingly diverse workforce.

But what is the evidence that these objectives are being achieved? A few individual examples such as Royal Bank of Scotland are able to demonstrate links between their reward practices and branch performance, but the research evidence is thin.

Last year, I spoke to one reward director who may be more representative of UK businesses. His firm has operated a fairly extensive flex plan for some years. He felt it had had some initial impact on morale and motivation. But with participation rates plateaued at less than 50%, he was beginning to question the return on the six-figure annual administration charges.

Surveying the situation in North America, US consultants Jay Schuster and Pat Zingheim are more scathing in their 2000 work Pay people right. “Benefits are expensive and their value not understood… (they) don’t link to company performance.”

The CIPD’s UK research Rewarding customer service? published in 2005 is more supportive, but the report’s author, Professor Michael West from Aston University, suggests we may be confusing the means with the ends. Organisations displaying the highest levels of customer service performance weren’t differentiated by flex plans, although they did have more extensive and generous benefits packages, work-life balance policies, and training and development provisions, as well as performance-related rewards.

But it wasn’t the packages and practices that produced the higher performance. As a manager at Scottish Water said: “It’s not just about what you do but how you do it. Taking account of peoples’ values is vital because you have to trust people to respond to the customer.” Professor West explains high-performing firms were using such practices to help generate a positive, supportive and genuinely rewarding environment, in which staff were totally engaged in their jobs and committed to customers.

Professor Jeffrey Pfeffer, an organisational behaviourist at Stanford University, agrees: “Creating a fun, challenging and empowered work environment in which individuals are able to use their abilities in meaningful jobs is likely to be a more certain way to enhance motivation”.

He feels that we have had research evidence for nearly a century to prove this. JB Priestley concurred after his Bourneville visit in the English Journey: “Owing to this system of paternal employment, the factory workers have better conditions, more security and infinitely better chances of leading a decent and happy life”.

When the CIPD ran a World at Work art competition for primary school children at its exhibition in Harrogate last year, not a pound note, pension plan or insurance policy was evident in the riot of colour up on the walls. Rather, there was a sea of smiling, happy faces, of actors, nurses and doctors, models, hairdressers, ski instructors, and deep-sea divers, all obviously engaged in, enjoying their work.

And amid the winning entries, there was even one joyous factory worker. In guess what? Of course, a chocolate factory.

Duncan Brown, deputy director general of the Chartered Institute of Personnel and Development