In the months following the Covid pandemic, many businesses across the world revisited their real estate footprint. The commercial property market in major cities was severely disrupted and the sudden move to home, and then hybrid working, provided an opportunity to rationalise costs. The contract terms of existing offices were relatively easy to understand and while there was an opportunity to reimagine the working spaces in a post-pandemic world, the main driver for change was undoubtedly a financial one. Starting from a financial angle has led to real estate and broader location strategies that are baked into the balance sheet and sustainable over the long-term.

The same can be true of reward strategies. Making the long-term financial plan the port of origin when creating the overarching reward strategy can give a business sustainable programmes that have time to work and have demonstrable impact.

One of the most commonly stated benefits of reward strategies is to engage and retain the best talent, often without mentioning financial benefits to the business. And yet, oftentimes, the impact on engagement and retention post-implementation is not as positive as intended. Starting from the financial angle, however, is  more likely to deliver the desired gains in employee engagement.

Here are 6 tips to create the right overarching reward strategy:

Start with your medium to long-term business goals

Where do you need your business to be in the next 3–5 years and what are the financial goals? This may be an already defined EBITDA target or top line growth goal for the entire business. Add into the picture the most relevant business strategies that should shape the reward one. For example, expansion into Asian markets or a higher proportion of overall revenue coming  from a new product. While business and financial goals should influence the overarching reward strategy, there should also be a lens where the reward strategy is seen as an instrument for attaining these goals.

Audit your reward costs

Quantify your current reward costs. Many businesses know what they spend on base pay but are unclear on the total cost when you add other elements such as the different bonus programmes, benefit plans, recognition tools, car schemes. If you don’t change anything with your reward programmes, what year-on-year increases will you see over the next few years?

Determine your success metric dashboard

Getting a full picture of these costs allows you to assess trade-offs between different reward components and what is likely to bring you the best financial outcome while driving employee engagement and retention. You can then invest more confidently in specific areas and de-prioritise others. Sometimes, there is surprise that investment in a particular reward programme is cut when there is a pressure on costs. If you have your high level financial goals as your port of origin, you can make strategic investments in reward that endure even when financial performance is lagging.

Success conditions

What are the quantitative and qualitative measures that indicate success? These should be a mix of factors which are trackable on an annual basis and on a more frequent basis. It is probable that in defining the strategy you will have determined new reward programmes, changes to existing ones and the shutting down of others. The progress of these actions can form a critical part of the metric dashboard.

• A reward governance framework that clearly defines who needs to approve the overarching strategy, any future adjustments and the impact on costs
• The right location strategy to secure the best talent for the best cost
• A fit-for-purpose job architecture
• The right HR technology

Alignment with people strategy

The overarching reward strategy cannot operate in a vacuum. What is the long-term people strategy of the business and if this has not been defined, what directionally are the people challenges that the reward strategy must help address?

Communications

Create a communication plan. Define the different audiences and their needs and perspectives so that the plan can be inclusive and nuanced accordingly. Consider creating a reward community comprising a range of different employees who can be a sounding board for the communications and provide regular, structured feedback on reward and how things are landing. Use diagnostics of why reward plans haven’t been impactful in the past and build this into the launch plan. This can mean investing in line manager education, a launch event, focus groups etc. No more than 50% of the effort and time should be on the design and getting the necessary approvals on the overarching reward strategy. The remaining 50% should be on the communications plan!

Andaze can help you with this journey and unearth viable opportunities for increased financial performance and employee engagement.
Contact us via the button below.