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Tailor rewards to match staff expectations without cost
Recession or no recession, compensation is an oft-discussed and debated topic between employees and employers. In today’s uncertain economy, employees are bound to think of money matters and hope that they will till get a reasonable pay raise and employers would be debating on the kind of compensation that can be given.
There is no contradicting the fact that compensation is an important factor to motivate the workforce. Companies decide on a compensation package that can attract and retain talent. Getting the best out of employees is the basic motive behind every benefit, rewards or perks offered to employees. The components of the rewards package varies based on the employee, organisation or industry.
Designing the compensation package on transient factors like inflation will only make employees believe that the company will come to their rescue when prices go up. Rather it would be wiser to educate employees to adopt a simpler lifestyle, cut on spending or make wiser choices.
When talking of rewards, managers must move beyond money matters and concentrate on the value the rewards package offers to employees. They should also explain how some of these rewards are directly related to performance. They must communicate the worth in a way that creates maximum impact on employees.
Organisations are looking at alternatives to traditional pay increments especially in tough times when compensation or raises may not meet employee expectations. Employees consider a pay raise as an annual feature or expect one when there is a marked rise in the cost of living. The management should send the message that compensation is more linked to performance and they should work at earning their rewards. Such merit –based compensation will not only have a positive impact on the performance of employees but also help the company improve its business and gain an edge over the competition.
Rewards based on performance will give good performers their due and motivate the average performers to try harder. The employees who take it for granted that they will get a raise irrespective of output will be shell-shocked and start to improve performance to get their due.
Another alternative is to introduce a variable pay scheme; this will act as motivation especially to high-performers and also help companies offer a competitive package on par with industry levels. It also helps check compensation costs particularly when employees are not putting in good performance. A survey reveals that more companies are adopting this clause in compensation packages.
Organisations today are looking beyond the traditional compensation packages and offering options that can add more value to the employee and act a motivating and retaining factor. Some of these options are flexitime or telecommuting choices to employees.
Such options make sense especially in tough times like these where companies are looking closely at cost-cutting measures. They are attractive to employees as well because of the reduction in transportation costs and the better work-life balance they promise. For companies it means less usage of resources when employees work from home and flexitime means reduction in travel expenses and commuting stress for employees.
It is also easier to get the buy-in of workers for such options because of the benefits they offer. When they realise the advantages, they will accept them in place of a lower compensation package or pay raise.
In these unpredictable times, companies do feel the pinch when deciding on compensation; they may not be able to meet employee expectations. They also realise the fallout of this on employee performance. However, they can adopt policies and methods which can add more value to employees’ lives and give them tangible benefits that will encourage them to stay on even if pay increments are less.
When employees realise that they are getting value through rewards in return for the time effort and talent they invest in their work, they will be motivated to continue their good performance. This also translates into loyalty, which is vital for companies to survive in these tough times.
