Not Just Competitiveness - But Competitive Advantage. A competitive reward program is not simply about mimicking the pay practices of your labor competitors - or about paying as much as (or more than) they do. It is about using the available reward dollars to create competitive advantage. It is about crafting programs and practices that attract the right workers to your company and engage them in making it successful.
Reward Success is about Business Performance. The measure of reward plan success must ultimately be business results. Period. My friend Kris Dunn claims, in this article for the HRExaminer, that revenue per employee is the only performance goal HR leaders will ever need. Kris brings a compelling case to that assertion, but I'd like to modestly suggest a parallel metric: revenue per salary dollar. RPSD encompasses, but goes beyond, mere headcount and addresses how you are really managing the bottom line in what, in most cases, is the biggest cost center in the organization. Can't benchmark it against your peers? Not today maybe, but you can track whether it is going up and down over time relative to what you are doing with rewards - and with talent management overall.
Embrace Proaction. Economic uncertainty, labor market unevenness and salary dollar scarcity are the new normal. We need to get past merely reacting to the squeaky wheels that these circumstances create (a habit that's become ingrained in many places over the last few years) and develop a proactive plan for actively monitoring and updating our reward plans. We need to minimize the proportion of our reward dollars that are spent reactively - fixing problems and quelling eruptions - rather than driving improvement or focusing on important goals.
Manage Expectations - Yours and Theirs. Your goal isn't - and can't be - to delight every employee. Your goal is to deliver rewards to the right people for the right reasons. Reasons that reflect who you intend to be as an organization and how you plan to win in the marketplace. The sign of doing this well may be that it makes some employees unhappy. Perhaps even deliberately so.
No Crystal Ball, But a Plan and Priorities. Many of us are reluctant to stick a stake in the ground when it seems the ground is continually shifting under our feet. Committing to a reward strategy doesn't mean that you can predict the future. It simply means that you are wading into the unknown armed with a plan and a set of priorities for spending money, to guide you in dealing with the turbulence that undoubtedly lies ahead. It's a jungle out there - and will continue to be so in the coming year. Take some time as we cross into the new year to get your strategy in order.
My thoughts looking forward. What do you see ahead for compensation and rewards?
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time. Follow her on Twitter at @annbares.