Clare Kelliher: Reward packages should adapt to the context in which an organisation operates

June Viewpoint CK

How an employer chooses to reward its employees sends out messages, both explicit and implicit, about their values and what is considered important. A well-designed reward strategy can act as an important driver for performance and employee engagement. However, the approach adopted needs to fit with the context of the organisation and the environment in which it operates.

How employees value the benefits offered is a subjective judgement and what is highly valued by one employee may not be valued by another. As the diversity of the workforce increases, it is important to recognise this and to design a reward package that will appeal to a wide range of employees.

Likewise, as organisations change it is important to recognise that employees may expect a different reward package from different types of employer. It is especially important to take account of this as organisations grow. The informality and flexibility that may be offered by small employers is often valued by employees and may be seen as compensation for less competitive levels of pay and fewer benefits offered.

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Employees who have been involved in a small business from its early stages may feel a have a high sense of involvement and feel a closeness to the business leaders, which is often highly valued. Sometimes small organisations offer ‘quirky’ benefits that reflect the personality or values of the owner. However, as an organisation grows, employees, especially new recruits, may have expectations of more competitive pay levels and a range of benefits offered by larger, progressive employers. Therefore, at this point, there is a need to review the reward package offered to remain competitive in the market place and to ensure it drives the desired behaviour.

Clare Kelliher is professor of work and organisation at Cranfield School of Management