Evaluation of reward remains a minority pursuit
Only a third of organisations assess the impact that their reward practices have on their employees, according to this year’s Annual Reward Management Survey from the Chartered Institute of Personnel and Development.
This indicates that the vast majority of respondents (68%) in the 520-employer survey are not aware of whether their rewards are working or not.
Charles Cotton, CIPD’s Reward Adviser, said: “These findings are stunning as organisations might have in place reward systems that actually do not enable them to fulfil their objectives. The result is they may waste their money, and that of shareholders and tax-payers.”
He added: “But even worse, organisations may find that by not targeting reward spend effectively, they could see their biggest asset - their top performers - leaving at a time when organisations should be doing everything possible to engage and retain the best to remain resilient through recession, and emerge strongly in the recovery.”
Among those employers who do assess the impact of their reward practices, the most common approach is to use people measures – employee resignation rates, staff surveys, vacancy rates, and performance management and appraisal data.
The business measure most cited is profit followed by productivity per employee. Other business measures used by those who assess their reward practices include:
Calculating remuneration spend
The CIPD found that an “alarming number” of UK organisations do not calculate how much they spend in total on remunerating staff (including base pay, variable pay, benefits and employer national insurance contributions). Almost half of the organisations surveyed (46%) fall into this category.
And of the organisations that calculate the size of their total remuneration expenditure, the vast majority (83%) are unable to break it down into its constituent elements (salaries, variable pay and benefits).
Other key survey findings
A final word
“It is a shame that our survey does not show that the tighter margins associated with the current recession are leading to greater scrutiny around pay and reward. This might have helped organisations avoid some of the job losses and redundancies we have seen recently.
If organisations do not have a complete handle on where their staff spending goes, it makes it far more difficult to prioritise investment in the measures that will retain and motivate talented individuals. Reward, if implemented correctly, can engage staff at a time when pay freezes and redundancies are prevalent, boosting the chances of the organisations coming out of the recession in good shape to benefit from the recovery.
The findings also bring the issue of transparency to the fore as shareholders and tax-payers are left unaware of where their money goes. This is especially striking at a time of economic uncertainty where everyone needs to pay the utmost attention to their finances. If employers are going to be effective in how they manage reward, then they need to invest in systems that allow them to capture this information.” - Charles Cotton, CIPD’s Reward Adviser.
Want to know more?
Title: Annual Reward Management Survey 2009, Chartered Institute of Personnel and Development.
Survey details: The CIPD’s eighth annual survey of UK reward management is based on responses received from 520 organisations, across all industrial sectors, employing around one million employees. The research was carried out between August and October 2008.
Availability: The 40-page survey is available for download in PDF format, free of charge, from the CIPD web site at www.cipd.co.uk/subjects/pay/general/_rwdsmry09.htm?IsSrchRes=1.
The Chartered Institute of Personnel and Development (CIPD) has more than 130,000 members and is the “leading professional institute for those involved in the management and development of people”. To find out more visit www.cipd.co.uk.
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