Reward strategy is ‘the principles that connect reward to the purpose and goals of an organisation’.
What does a good reward strategy look like?
A good reward strategy guides the design of each aspect of reward (e.g. pay, benefits, bonus, recognition, wider deal).
It comes from the top. The leadership team should agree the reward strategy and have explored the potential implications.
And it is clear and straightforward so that you can be transparent with employees. Ideally summarised on one simple slide.
What are the steps to creating a reward strategy?
- Ensure you understand the current state. This includes the business and people strategy, employee perspectives and the rationale behind why things are done the way they are.
- Involve stakeholders to agree a consensus. Key aspects you may want to consider include your pay stance, degree of differentiation in pay and bonus, what the differentiation is based on, importance of team vs. individual reward and what makes your deal unique?
- Create an action plan to deliver your strategy. Remember your strategy is your desired future state, you don’t have to be there as soon as you share it.
- Communicate with employees.
Our golden rule
Our golden rule is never to just say ‘fair pay’.
We see this all the time and on its own it’s meaningless. Fair pay means different things to different people, and is different in each organisation.
You’ll need to clearly spell out ‘what fair pay means around here’. This involves deciding on the importance of factors such as market rates, internal consistency, performance, contribution, cost of living and length of service.
Do you need help with your reward strategy?
Developing reward strategy is a particular area of expertise for us. We can bring an external perspective and experience, help guide and challenge your stakeholders and support your employee communications.
See how we can help. We’d be delighted to hear from you.
This short blog is part of the Verditer Reward Quarter. It’s where we bring clarity to specific topics that combine to create the world of reward.
Think of it like exploring the distinct cultural zones (or Quarters) that make up a city.
Click here for more:
Reward Quarter No. 2: Job Evaluation
Reward Quarter No. 3: Pay Benchmarking
Photo: Kimberly Vardeman