Are you ‘reward ready’ for business success in 2017?

What’s in store for 2017?
Strategy paper being read to show Reward ready

Technology and a rapidly changing workforce are disrupting our workplaces beyond recognition.  Add to this economic uncertainty and the businesses that can adapt will survive.

So, what is critical for business success in 2017 and beyond?  Here are five aspects we’re hearing a lot about and some thoughts on what they mean for reward.

Smart technology

The future is about creating great user experiences for Smartphones as they become increasingly the device of choice (Ofcom).  It’s no longer good enough to just adapt what works well on the PC.

For reward, this means bringing all aspects together in one place regardless of source of data or supplier.  It’s about single sign in with one password (or fingerprint/voice command!).  And it’s about interactive apps that employees can access as and when they want to (Employee Benefits).

Trust in crisis

The 2017 Edelman Trust Barometer shows trust is in crisis around the world.  CEO credibility is falling and there’s a growing divide between the informed public and mass population.

Brexit is viewed by many commentators as a symptom of lack of trust and social division.  A demonstration of “deep frustrations at income inequality” (Forbes).

Fair pay is central to creating a culture of trust.  If you don’t have a clear reward strategy that spells out what ‘fair pay’ really does mean, and transparent structures so your employees understand how pay decisions are made, then you’ll need to take action.

For many companies, removing individual performance and reward in favour of company bonuses, and team-based goals and recognition, will impove trust, collaboration, and innovation.  

Equality regulations

Fair pay is also about addressing excessive high pay and unacceptably low pay.  Increased regulation aimed at fairness, equity and transparency in therefore no surprise. 

The best reward teams will lead the organisational change these regulations seek to address rather than see it as a compliance exercise (EY).   This includes:

  • Gender Pay Gap reporting from April 2017 – not just about figures, key messages, and pay foundations, but about action to improve gender parity
  • National Living wage aimed at 60% of median earnings by 2020 – not just an affordability challenge, but a catalyst to develop skills and improve productivity and make a difference to in work poverty
  • Removal of salary sacrifice from April 2017 apart pension, childcare, life insurance and ultra-low emission cars (Autumn Statement) – an unwelcome change for sure, but time to focus on creating a valuable deal for all employees, not just those with higher tax or more available cash
  • Proposed Corporate Governance reforms – why wait for regulations to pay our executives in a defendable and transparent pay and publish CEO pay ratios?

And if Corbyn gets his way, we may even see a pay ratio cap.

More from less

In the face of lower growth forecasts and pay increase predictions, the winners will be those with a reward strategy that firmly focusses on value and return, and does more with less. 

Performance pay needs to be worth the time and effort.  I talked last year of moving away from endless ‘tweaking’ of reward decisions, to targeted and meaningful differentiation in senior, high skill and business-critical, roles only.

Technology and social media have an increasing role to play in engaging employees in the value of their reward package.  With employee stories as an authentic way to ‘sell’ the deal.

Recognition is low cost, high return.  Giving, receiving and observing recognition are all motivational (O.C.Tanner) and there’s some great social  platforms around.  Maximise the impact by creating a culture of noticing and celebrating others, not just prescribing a rigid award processes. 

In fine-tuning benefits packages to drive engagement and productivity, we’re set to see more focus on ‘wealth creation’ rather than ‘retirement planning’ over the coming year (Willis Towers Watson).  

Talent as consumers

Scarce skills and ease of mobility brings employees greater choice than ever before.   Future talent will be making informed decisions about who to work for, and businesses of the future will need compelling employer brands. 

Performance and reward systems will increasingly recognise the importance of ‘personal brand equity’ in the overall deal.  Managers as coaches and mentors who understand individual goals and facilitate strength-based development will become the norm.

Having a great employee deal is simply not enough, it's got to be marketed well and offer bags of choice.  The removal of salary sacrifice, and the emerging gig economy, all point to personal allowances to spend with any provider.  And a selection process with the speed, choice and personalisation of an Amazon shopping experience perhaps? 

I hope this helps your thinking.  Whatever is in store for you in the year ahead, I’m sure it will be rewarding.

 

At Verditer we partner with clients to make reward and performance management more effective.  Contact us to hear more about our approach to reward strategy, pay structures and bonus design.

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Photo by JD Hancock