Rewarding Success

Creating a successful reward and remuneration strategy requires significant investment from an organisation's management and human resources teams and is essential if a business is to achieve its objectives.

Retaining and motivating staff is a key value driver in any business - that is commonly agreed. So how are the best companies comparing? Have they successfully aligned their business strategy with their reward and remuneration policies?

Given the importance of a successful reward and remuneration strategy, Grant Thornton recently surveyed the UK's '100 best companies to work for' to see how successful they thought they were, and what lessons could be gleaned by those who fell outside the top 100.

REWARD AND REMUNERATION STRUCTURE

Of those companies surveyed, only 38% believe they have a staff reward and remuneration structure that is highly successful - a surprising result, given that these are companies who take the reward and remuneration of their employees seriously.

One would assume that more than one-third of the UK's 100 best companies to work for would believe that their reward and remuneration strategies are highly successful in terms of aligning staff rewards with business objectives.

Perhaps, despite their success, they are still missing a few tricks in terms of making the best use of the various incentivisation tools available to them. This poor result indicates that reward and remuneration is not a simple task and if these businesses are not getting it right - then who is?

Of the remaining businesses surveyed, 47% felt they were achieving partial success through their reward strategies, 12% felt they were marginally successful and 3% felt that they have no impact on their business objectives at all, which again was surprising.

The reality is, that without a successful reward and remuneration strategy it will clearly be a struggle to incentivise staff performance in line with business objectives, create a positive attitude amongst staff, attract high calibre employees or retain existing staff - all key drivers in the creation of such policies in the first place.

So it was somewhat pleasing that two-thirds of those businesses surveyed said that they would review their reward and remuneration survey over the coming year.

CHRISTMAS PARTIES MORE POPULAR THAN ADDITIONAL HOLIDAYS

Flexible working was the most popular reward offered by the 100 best companies to work for with 89% allowing their staff to adopt this benefit. This was followed closely by formal recognition and awards (86%) as the second most popular benefit.

Surprisingly ad-hoc benefits such a Christmas party (79%) were more popular than performance related bonuses (78%), extra holidays (74%) and commission (63%).

Interestingly, employees have now come to expect the provision of life assurance, an increase in basic salary and maternity or paternity benefits above and beyond the legal requirements.

Employees take such rewards for granted and they are not seen as being particularly generous - a point that should be clearly noted by those companies who only provide such benefits.

As these rewards do come at a cost to business it is essential that employers communicate this message to their employees and highlight that they are in fact genuine benefits.

Despite the recent Turner Report and warnings about changing demographics placing a strain on the state pension, our survey showed that pension provision was not considered a particularly effective or popular reward mechanism. In fact employers feel that formal recognition for their staff (52%) is better received by employees than pensions (50%).

The lack of emphasis on pensions is a cause for concern, especially as this probably represents the biggest (and arguably the most important) single investment an individual will ever make. The lack of importance is likely to be a reflection of the wider apathy to pension provision, which the Government is desperately trying to change.

RELAXED WORKPLACE ATTITUDE FAVOURED

Some of the most interesting results of our investigations came from looking at the changes in workplace culture. Those companies who feature in the top 100 places to work for have done away with the days of hierarchal management structures, colleagues who don't socialise and employees who are 'suited and booted'.

95% of the businesses we surveyed said their people have fun at work and three quarters enjoy a drink together regularly in comparison to only 5% of businesses who say they rarely socialise with their work colleagues.

Workplaces were also found to be quite relaxed, with people being trusted to get on with their jobs in 92% of businesses - more than twice the number who don't allow their employees to do things without proper authorisation (45%).

More than half of the businesses surveyed had a flat structure (52%) with only 33% having a strict or traditional hierarchical structure.

The survey also identified that more than half (56%) of the UK's top 100 companies allow their employees to dress casually - more than three times those who have a strict dress code (16%).

According to the results of the survey, businesses clearly have a more relaxed attitude to workplace environments than we have seen in the past - particularly when it comes to allowing individuals to take more responsibility for their workload.

Essentially it all comes down to trust between the employer and employee. If the business trusts its employees to get on with their job, then the employee repays the company with dedication, commitment and hard work.

HOW SUCCESSFUL COMPANIES ACHIEVE THEIR BUSINESS OBJECTIVES

The survey asked respondents what they regarded as important to create an environment which is conducive to achieving businesses objectives. The key factors identified were strong leadership (88%) and effective communication (77%), whereas only 55% of companies believe that having clearly defined roles and responsibilities or clear reporting lines (37%) would help achieve business objectives.

These results show that these progressive companies are proving that leading from the front and having effective communication throughout your company are essential to ensuring that you achieve your business objectives. They are 'walking the talk' rather than just 'talking the talk'.

SUMMARY OF FINDINGS

The survey found that the ultimate business model for success (according to the respondents) is strong leadership coupled with open and honest communication that sets a relaxed culture in which staff are encouraged and trusted to posses the corporate maturity to get on with their jobs.

This culture must be supported and underpinned by a reward and remuneration strategy that will both motivate staff and ensure that they are incentivised to perform in line with business objectives.

Again, we were surprised that the alignment of reward philosophies with business objectives was not one of the key priorities for businesses when setting their reward and remuneration strategies. However, these companies appear to have found a very successful model to apply to their businesses which would be why they are considered amongst the 100 best companies to work for in the UK.