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Dona Roche

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Bonus backlash: Setting the record straight


With ‘bonuses’ out of fashion in the tabloids, how do you communicate and justify using bonuses as rewards in your organisation? Engagement has a part to play, says Dona Roche-Tarry.

Whilst it may be some consolation to recession-struck workers that new research shows that overall boardroom pay across the FTSE 350 has fallen "significantly from last year", while average bonuses are down by a quarter and total pay is down by 10%, CEO salaries are still a world apart from average pay packets.

The media portrayal of "fat-cat pay" means that for many employees perception is reality – leaving many employees disengaged, regardless of the facts. As such it falls to HR along with the marketing communications team to ensure the right messages get through to staff. The key to this is effective communication and transparency of information. A good number of executives have chosen to take no increase in salary and zero bonuses for the good of the company. HR must communicate that they have done so because they are concerned about the company and want it to be successful in the long run.

Where bonuses have been paid, HR needs to explain why – if there has been positive performance in some divisions, for example – and what metrics have been used. More often than not it is tied to performance. If the company has only achieved 80% of its target, bonuses may have been paid at 65% and executives end up getting less they expected. It’s vital this is communicated effectively to employees.

There are many different layers to an effective communication strategy, from regular written dialogue to face-to-face meetings, podcasts and conference calls. But the most important element is to establish a common and consistent message that goes out to all staff, from the first line of management right up to the CEO. It needs to be constantly reinforced; if everybody is saying the same thing people will start trusting the message. If they’re hearing four or five different things they’ll only get confused.

Before deciding on any strategy, HR needs to engage with the employee base to understand what the issues are and which areas could be improved. Some companies conduct employee surveys on a quarterly basis but many don’t, and they need to think about doing so quickly. Employee working groups or nominating employee advocates can also help with getting feedback.

Once a communication policy has been established, HR needs to bring the workforce and management together. This needs to be more than just sending an email to all staff. Management and the executive team have to go on the road, visiting every site, meeting employees and having open and transparent question-and-answer sessions so those who are feeling disengaged can have their say and listen to the response.

If it’s a UK company they need to go from Scotland down to Portsmouth. It’s not an easy thing to do and it takes time, but it’s got to be done. In terms of results, most companies are measured quarterly or monthly so every quarter or every month, whatever their measurements are, they should be out there communicating the results and the impact of these on the business. But such activities need to become part of the culture rather than one-offs.

Part of this is to get the CEO to commit to more effective communication and then work with all the management teams. In some cases this will mean organising training so managers are comfortable with their responsibilities. The most important levels are the first and second lines as they’re the ones who are most in touch with employees.

If the company culture is such that executives sit in an ivory tower and rarely mix with staff, it’s likely that employee engagement has declined pretty dramatically in recent months. But right now this is vital because when the market turns the risk is that the top talent will leave if they haven’t been kept engaged and informed.

The economic downturn has been so dramatic that it will have a long-term impact on almost all companies. The key message for HR is to use it as an impetus to shift to a more transparent company culture and to work even harder at employee engagement. Only then will organisations be able to bridge the gulf that has emerged between leaders and the wider workforce, however these have come about.

Dona Roche-Tarry is managing partner, European board services at global search firm CTPartners


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