Friday, 15 May 2009

Measuring Reward

 

One of the things we mentioned several times in Globoforce’s webinar (recording here) yesterday was the role of measurement in reward and recognition.

I also referred briefly to a new study conducted by Hay and WorldatWork which has found that companies are planning to link their measurement of reward programmes more towards employee engagement than the bottom line.

Since the webinar, Ann Bares has posted on her views about the survey at CompensationForce.  Ann’s main concern is about the balance of lead (eg engagement) and lag (eg financial) metrics in measuring reward.

I have a slightly different, although still similar concern.  To me, the critical issue associated with how you should measure your reward programme is that you need to be clear about your intended outcomes first.

This can be demonstrated using Maslow’s pyramid – see the slide from Derek Irvine’s presentation (yes I know this isn’t really a hierarchy – I’ve said as much myself – but I’ve also said that I still use it when I think it’s helpful to do so – and this is one of those times! – I presume Derek will have a similar view):

 

 

If you’re operating around the base of the pyramids, helping meet employees’ physiological and safety needs through cash and other payments, there’s very little point measuring engagement (more linked to self-actualisation, esteem and social needs), as this isn’t going to be what you’ll create.

However if you’re using other elements of total rewards or of your EVP, and you are targeting the engagement of your people, then of course you’re going to want to measure this (as well as the financial impact of this engagement when you can).

 

But anyway, in more general terms, I feel fairly positive about the survey.  Particularly when you consider I4CP’s recent findings that higher performing companies tend to be more apt to measure talent-related metrics (93% of higher performers measure employee engagement, compared to 79% of lower performers).

I4CP’s conclusion from this is that "it most likely reflects the attitude that low-performing organisations see their employees a mere expense and not a source of competitive advantage."

If Hay’s / WorldatWork’s survey is an indication of a further shift to seeing employees as sources of critical capability / human capital, then this really is good news.

 

 

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2 comments:

  1. Jon:

    The Hay Group/WorldatWork study is an interesting one as you note. While I do have concerns that we let the pendulum swing too far away from financial metrics, I do agree that talent management metrics have an important place in rewards. The key is in striking the right balance.

    And, as you put it so well, we can only find the right balance if we first clearly identify what our intended outcome is.

    Great having the chance to share the panel with you at the Globoforce webinar!

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  2. Thanks for the reinforcement, Jon. That Maslow slide can be a little confusing without the builds. If people would like better understanding, this post may shed some light: http://globoforce.blogspot.com/2008/12/no-bonus-year.html

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