As companies break for the festive season and think about what’s ahead in 2022, a key question for many Executives and Boards will be, “How can we ensure our remuneration and reward strategy is going to stack up?” To assist, we have prepared the following 5 steps to a killer remuneration strategy in 2022.
Uncertain operating conditions will likely continue well into next year. If you overlay this with the potential for greater staff turnover from the ‘great resignation’, priorities quickly shift to shoring up the remuneration and reward strategy.
It can be beneficial for organisations to think about their reward program as a tool for providing focus. A well designed reward program provides employees with clarity on what’s important to the business, defines the level of importance and then places a value on the resulting outcomes.
Here are our 5 steps to a killer remuneration strategy in 2022 and beyond
Define your remuneration strategy
A remuneration strategy is a defined method of paying employees that a company can adopt to help support its goals and objectives. The strategy provides direction on:
- the level of competitiveness
- the structure
- the role performance plays
- the level of transparency
- how remuneration fits as part of the broader reward programs
The strategy is formalised as a written statement which acts as a guide for employees, managers, and business owners.
Want more information on how to define your remuneration strategy? Read Why Have A Remuneration Strategy?
Think broader than just ‘pay’
These days it’s becoming clear that a ‘fair day’s pay for a fair day of work’ isn’t enough. To engage the aspirations and varied demographics of employees, organisations must think beyond pay alone.
Everything you offer employees in exchange for their time, skill and effort sits under what we call “Total Reward”. Organisations can use interdependent reward elements like remuneration, benefits, career development, and work/life to offer an attractive package for employees – a package that also aligns with business priorities. The trick is determining an optimal mix that is beneficial for both the company and employees.
Want more information on how to adapt your reward strategy for workforce expectations in our new world of work? Read The Great Resignation – Time To Review Your Reward Strategy
Freshen up your performance management
The rapidly evolving workforce dynamic and new working world presents companies with a catalyst for change to their tired performance management traditions. Misleading outcomes, clumsy processes and complex structures drain your company’s resources for questionable utility. Perhaps its time to break traditions and consider fresh approaches? Approaches such as forward focused conversations, shorter review periods with ‘check-ins’, de-emphasise the performance rating with a conversation about being either ‘on track’ or ‘off track’.
Want more information on contemporary performance management? Read Is It Time To Drop Performance Review Ratings?
Build incentives for a win win
It’s a common problem for companies to call incentives ‘variable’ when in reality, they are a given. When it comes to incentives, employees often ‘expect’ a payment and the longer that cycle continues, the harder it is to break.
Instead, Boards and Executives must be able to define and communicate what it means to create value within their businesses. They must determine how and with whom that value should be shared through their incentive plans.
Want more information on designing performance incentives for ROI? Read Designing Employee Incentives For ROI
Be more transparent and communicate with confidence
Whether it’s public, private, not-for-profit or government agencies, pay and broader employee reward transparency is increasingly becoming part of what employees come to expect from organisations. Companies need to be confident that their pay and reward structures are
- delivering on employee expectations
- evolving to good governance requirements
- ultimately appropriate pay equity
The vehicle to move towards pay equity is pay transparency.
Want more information on pay transparency? Read Getting Crystal Clear On Pay Transparency
These 5 steps are a useful guide to developing your remuneration and reward approach. They will help to reinforce business priorities and communicate how the company and employees can best partner to achieve their goals.
Yet as you work through these steps, you may encounter other remuneration and reward questions and challenges. Review these other helpful articles for a deeper dive.
If you’re wondering:
“How can an employee share scheme help attract and retain our talent?” Read 8 Steps To Employee Share Schemes In Private Companies
“Are our incentive measures right for where the business is heading in 2022?” Read Incentive Measures For Each Stage Of Business
“Should we change our pay structures to support employees to ‘work from anywhere’?” Read How Much To Pay For WFA?