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21 Jan 15

Reward Communication – The Good and the Bad

08:15 at The Mercer, 34 Threadneedle Street

We were delighted to welcome Nick Throp from likeminds as the guest speaker at our latest Comp and Coffee seminar.   He shared his inspirational thoughts on effective reward communication, and the work his company do on Total Reward Branding.  In the last 10 years, considerable thought and investment has gone into communication of Total Rewards by employers working with restrained pay budgets yet still wishing to engage employees on reward.  

Unfortunately, the same effort does not always go into communicating compensation policies, and as a result, many employers are far from the open transparency recommended.  World At Works January 2015 study  on Compensation Programs and practices stated that whilst more than 9 of every 10 companies have a compensation philosophy (92%)  only 28% of respondents indicate that most or all of their employees understand the company’s compensation philosophy.

So why are we increasingly failing to explain compensation approaches to managers and employees?  

 “We can’t tell them that!”

The setting of reward budgets still seems to be consigned to secret rooms and mysterious algorithms which are often deemed to too “sensitive” to communicate.  Things like… “How the bonus pools were set,”; “How we’ve done as a business this year,” and “What our market pay aspirations are”.   If your business strategy really translates into your people strategy and onwards to your reward strategy, why are we not able to be transparent about this?

Line manager’s not equipped to communicate.

Survey evidence continues to suggest that HR lack confidence in Line Managers ability to communicate pay outcomes effectively.  Part of the problem arises when compensation processes are run on spread sheets.  Managers are not equipped with user intuitive tools that allow them to calibrate key data to make effective and informed pay decisions.  

Pay budgets too small to allow real differentiation so what is there to communicate?

Private sector pay awards have been running at a 12 month median of 2.5% since 2011 which has led some employers to believe there is nothing significant to communicate. 

However, wage rates are not going to change imminently and economists are continuing to predict that we will not see significant wage growth until 2016. Decreasing unemployment indicates increasing competition for talent, and labour productivity needs to improve.  Organisations must start differentiating now, and communicating why to employees.

Meanwhile keep an eye out for our next Comp and Coffee seminar coming at the end of April.