Reward – key findings from recent think tanks

Earlier in the year, we invited large multinational organisations to our Employee Reward Think Tanks in London, Toronto and New York. These independent informal research exercises were used to gather information on the impact of Global Total Rewards Consolidation on Rewards practice. The format was a roundtable forum seeking individual opinion based on personal experience and knowledge. While Xerox and Unilever played host, all the events were chaired by the Foresight Group.

Access to complete, up-to-date and reliable data on reward was seen as a major challenge in the current state in across the two events. None of the participants had a reward database that brings all reward data together in one place. Aggregated data is currently dependent on manual extraction and translation. Even with the most contemporary HRIS, data is drawn from disparate sources, many of which are still spreadsheets. Analysing reward and responding to information requests is slow and prone to error. The consensus at all the events was that reward consolidation systems would be adopted if available.

Here are some of the key outcomes outlined in the event report:

Cost savings – With access to a central reward system, many high-cost manual processes could be automated to yield significant cost savings (salary surveys, annual benchmarking exercises by job and country, modelling and administration of international assignments).

Quality of reward service (annual to rolling) – Participants also suggested that these processes would be transformed by real-time data. For instance, instead of being an annual event, benchmarking and market salary adjustments could be conducted on a rolling basis. Benchmarking could also break free from fixed date comparisons with peer organisations to a constant rolling process of daily comparisons.

Quality of reward service (statistical analysis) – There was general agreement that reward practitioners would spend less time on administration and more time on analysis. This would require upgrading of data skills and a review of how time is spent by reward professionals. With access to very granular, real-time data for all employees, in all jobs, in all markets the annual cycle of rewards might be replaced by a much more dynamic and personalised process.

Philosophy – Everyone saw that the data revolution would quicken the transition towards greater personalisation and choice in reward. With reference to this, one of the participants mentioned philosophy out loud. All participants spoke with reference to the role of reward in supporting the core philosophy and beliefs of the business. Communication, care and advice would become increasingly important to ensure that employees made informed choices. Reward would be involved in matters such as pointing out the consequences of short-term gains at the cost of long-term risk in health and pensions. In complex areas of reward there was an appreciation of the conflict between what employees need, want and understand.

Benefits – Both events forecasted a growing shift towards benefits and flexible, personalised choice as a component of reward. This was to allow organisations to adapt to local market norms in attracting the best recruits. The only way that this can be managed safely (and controlled) is through reliable centrally documented records that catalogue all of these diverse practices. There was also interest in the prospect of putting an economic value on intangible rewards such as morale, reputation and CSR.

Performance-related pay – There were general views that though pay for performance is an accepted norm, there is very little evidence to prove its impact on results. For most employees, individual performance is impossible to measure accurately and is dependent on external factors. Nevertheless, there was a belief that it does have an effect. The consensus view was that a comprehensive real-time reward database would facilitate trials and experiments to statistically validate and optimise the real business impact of pay and incentive schemes.

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Maintenance, complexity and integrity – There were concerns about the burden of keeping a global reward system up to date. Variability by country and business units can be high and would depend on greater discipline than the current devolved spreadsheet approach. There was interest in outsourcing this work to third parties or setting up direct feeds from external systems such as benefits systems. There was also a sense of growing pressure from tax authorities; for example, the requirement from California to show the actual number of days worked in the state. Maintaining this logic in a new class of enterprise system where multiple users shared the cost held obvious advantages.

The discussions we had in each region lead to deep insight into what the market desires from their employee rewards and data systems and has inspired new thinking into what we want to offer our clients.