The most common objective for reward strategies globally is to reward and retain the high performers but UK companies are facing the biggest challenges in delivering on this objective, according to a new survey.
In total, around three quarters of the 1300 respondents in the UK, in continental Europe and globally agreed that rewarding and retaining top performers was the number one priority for their reward strategy currently and was likely to remain so for the next three years. In the UK, 95% of respondents said linking pay and performance is a key factor in delivering business success.
Despite the high priority given to rewarding high performing individuals, it remains one of the areas in which there is the least perceived success. Towers Perrin’s survey report, Rewards and Performance Management Challenges: Linking People and Results found that nearly 60% of UK respondents are expressing their dissatisfaction in this area. The primary reason is that budgetary restrictions are having a significant effect on their ability to reward high performers.
Just under half of the UK respondents have changed their bonus plans, and slightly less their salary review processes. The result is that packages tend to be highly leveraged with around 30% of UK companies awarding top performers more than twice the bonus awards of average employees.
Cost constraints are leading to a change of emphasis: around 45% of UK respondents say they will re-examine their incentive structures in the next three years. But the big area of growth is in recognition awards. Compared to the last three years (where only 19% addressed these schemes) 44% of UK respondents will be looking at ways to recognise performance outside of formal incentive arrangements.
Another big area of growth of is reward communications, with around three quarters of UK respondents looking to implement new programmes. This suggests that while companies feel that programme design remains an issue, an even bigger issue is to win hearts and minds through effective employee communication.
“UK companies seem to be facing particular challenges in devoting sufficient financial resources to fund the awards required to pay for high performance. This is forcing a rethink that focuses on more individual recognition – both monetary and non-monetary – and in better communicating the rewards companies are offering to employees,” says Jim Crawley, principal at Towers Perrin, the global HR consultancy.