New research reveals that the best performing companies pay 5% less in wages than the average.
This is according to global management consultancy the Hay Group, that studied over 1,467 senior executives and directors in 358 global companies for the 2008 Fortune’s Most Admired Companies (MAC) list.
The Hay Group study finds that firms on the 2008 Fortune list manage reward more effectively, are better at retaining staff, and therefore have less need to recruit expensive outside talent.
Colin Evans, associate director of reward consulting at Hay Group, commented: “Our research found that companies who make the MAC list haven’t just stumbled on the formula for making employee reward programmes work more effectively.
“A key differentiator between higher and lesser performing companies is the implementation of successful employee reward strategies. The best strategies excel at communicating benefits, optimising performance-related pay and ensuring that reward programmes are aligned with business priorities.”
The findings also revealed that 45% of MAC claim that their reward programme allows them to attract the talent they need, compared with 25% on average. Similarly, 48% report that their reward programmes support efforts to retain their best talent, versus 28% of poorer performers.
The study also shows that 41% of MAC believe their reward programme is internally fair, compared to an average of just 27%. Furthermore, 74% of MAC employees understand and appreciate that rewards consist of both tangible (salary, bonus, health cover, pension) and intangible (company culture, career, development) components, compared with 61% on average.
