Peter Reilly: How can employers build empowerment into their reward policies?

peter reilly

Empowering staff is an understandable objective for organisations operating in today’s knowledge and service economy. Releasing employees’ discretionary effort can lead to higher productivity and better customer service, and one key way of getting greater employee engagement is through giving colleagues more autonomy. This means offering them access to more space to shape their work and to determine how best to meet customer needs.

Moreover, employers moving away from a command-and-control approach to staff management to delegated responsibility fits the changing workforce demographic where employees are less deferential and wanting to give more meaning to their jobs.

So how can employers build empowerment into their reward policies? The obvious way is through personalisation or mass customisation, where staff can shape their rewards much more to suit their own wishes and circumstances. In one way this is not new: flexible benefits have been the means by which organisations have for many years allowed individual tailoring of the benefits package.

However, flexible benefits have always had their limitations. One is that they ignore base or variable pay, where most of the money goes. Another constraint is whether sufficient cash is made available to offer real flexibility and, third, whether there is restriction in which benefits employees can choose.

So real mass customisation would involve employees having greater choice of benefits and scope to alter their pay mechanism.

The trouble is that organisations often use their reward and performance management systems to change the culture of their organisation, to incentivise certain behaviours in staff and to focus employee effort on key deliverables, with standardisation driving their approach. Real empowerment is about employers letting go and accepting that employees will sometimes make poor decisions, which they will learn from.

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Commonality has its benefits, but it has to be set against the virtues of allowing staff to shape their working lives, including their reward, in ways that satisfy the business and simultaneously suits themselves.

Peter Reilly is principal associate at the Institute for Employment Studies