PHILADELPHIA, May 14, 2009 – A new Hay Group and WorldatWork study finds that 57% of companies plan to increase their focus on employee engagement in measuring their reward programs during the next two to three years, while 64% will also increase their future focus on the motivational value of reward programs. The “Reward Next Practices Survey” was conducted by Hay Group and WorldatWork, and surveyed approximately 763 organizations in 66 countries from a cross section of industries to determine the reward practices of global organizations during the next two to three years.
Download the full report.
“Tough times mean that companies are still maintaining a sharp focus on costs,” said Anne Ruddy, CCP, President of WorldatWork. The Hay Group and WorldatWork study found that a strong majority of organizations plan to increase their focus on improving the pay for performance orientation of their reward programs. “We are seeing a strong future trend in achieving a better balance between the financial management and motivational aspects of reward,” added Ruddy.
According to the study, current reward program performance metrics are more heavily weighted toward financial performance than employee engagement, with companies reporting a current focus of 71% on using financial performance measurements and 40% on employee engagement. Other performance standards, such as customer satisfaction, innovation, talent management and employee engagement are all at less than 40% of current focus by organizations. Of all of these metrics, organizations report a more intense future focus (57%) on employee engagement performance.
“The global downturn has prompted organizations worldwide to shift to an increased focus on how to engage and motivate employees,” said Tom McMullen, U.S. Reward Practice Leader for Hay Group. “However, during times when budgets are tight, maintaining an engaged workforce is more difficult than ever. When times are tough, employers are looking for ways to improve engagement – and it’s essential they remember the motivational power of intangible rewards, the role of the line manager in establishing a great work climate and the importance of communicating effectively with employees.”
Hay Group’s study also found that 57% of companies plan to ramp up their future focus on regularly measuring the return on their total reward investment, while only 20% of respondents currently regularly measure the return on their reward investment.
“Non-cash financial rewards such as benefits and pensions often represent a third or more of an organization’s total remuneration costs, but few employers understand the total value of their packages. As organizations continue to tighten their belts, they’re recognizing the importance of getting the most bang for their reward-program buck and putting their mouth where their money is in terms of effectively communicating the reward program’s value,” added McMullen.
Other key findings from the Reward Next Practices Survey:
- Close to half of the respondents (44%) plan to increase their future focus on using reward to reinforce a culture of creativity and innovation, while creativity and innovation is a current focus for only 25% of companies.
- Two thirds (67%) of respondents will focus more on improving the ability of their line managers to effectively manage the overall pay-for-performance relationship with employees, and on the role of line managers in communicating total rewards to employees.
- More than half (57%) will increase their focus on managing pay holistically at a total remuneration level (as opposed to managing reward elements separately and independently).
- Leveraging important non-financial rewards, such as career and development opportunities (60% greater focus), improving work climate (53% greater focus) and non-financial recognition (52% greater focus) will be key components of the reward programs of the future.
“The erosion of financial capital has led to a renewed focus on the value of human capital,” said Ruddy. “Organizations are learning to treat employees as assets, not costs – and to invest strategically in talent using a broad range of total rewards.”
More information
Click here to download the full report. For more information, or to arrange for an interview please contact Mitch Kent, Global head of PR for Hay Group, +1.215.861.2315 or contact Mitch via email.
About Hay Group
Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.
About WorldatWork®
The Total Rewards Association
WorldatWork is a global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork provides a network of more than 30,000 members and professionals in 75 countries with training, certification, research, conferences and community. It has offices in Washington, D.C. and Scottsdale, Arizona.
# # #
