Friday, 31 July 2009

Reward systems and behavioural HR


   Interesting piece of research out from the CIPD today looking organisational risks associated with pay and reward of employees.

“Despite the media and regulatory spotlight on the dangers posed by bonuses around encouraging poor behaviour and performance, the CIPD survey finds bigger concerns around overall pay budgets failing to deliver improved performance. Money is being wasted because poor communication of pay and reward means budgets are being spent without anyone understanding what they and their teams are being rewarded for.”


Communication, of course, being the thing we blame, when we don’t get what we hoped to achieve - ‘oh, of course, it needed to be better communicated’.

The real problem is much more likely to be that reward systems haven’t actually been effectively designed to generate the behavioural changes or objectives that are desired – many being based upon erroneous assumptions about motivations and behaviours.



The CIPD find the most common areas of concern are:

  • Poor communication of reward leading to poor organisational performance
  • Inability to adapt reward policies and practices to the changing business environment
  • Reward failing to engage employees
  • Reward failing to attract key talent
  • Ineffective reward strategy causing poor employee relations.


In addition, they report that:

“Worryingly, only a small minority (17%) of respondents believe that their organisation is prepared to meet the reward risks identified in the survey.”



“Far from being a source of competitive advantage, many of our respondents are worried that their organisation’s approach to reward is so unresponsive it could act like an anchor and drag it below the current turbulent economic waters.”


Well, at least the potential fall-out from these problems will be less significant than what we’ve already experienced in our banks.  But it still means that we’re not getting the behaviour and performance that we’re after from our employees, and that we’re wasting very large amounts of money in the process.

I have to admit to being slightly dazed by these findings.  How organisations can be continuing to waste one of their largest expenditures in the present economic environment is beyond me.

And , come on HR!  If you’re organisation isn’t prepared to meet the risks in your reward strategy, do something about it!



Photo credit: david.nikonvscanon


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