Communicating Reward – Why Does It Matter?

Employee communication and engagement have become high priority issues on the agenda of 21st Century organisations today. Their interdependence is no surprise given the crucial role that good communication plays here. When it comes to reward decisions affecting the organisation or individual employees, why is communication sometimes seen as an after thought? This may be surprising given the potential to motivate and demotivate employees.

As an example, let’s look at performance pay. People need to clearly understand how and when their performance will be assessed; what criteria will be used and the impact this will have on their pay. They need to know how it relates to them personally and to the business goals and objectives. Getting this right is essential in building trust which contributes towards engaged performance.

Communicating Reward - What are the priorities?

The fact that employees have different needs and expectations comes as no surprise. Over recent years this has become reflected in the reward package that employers offer. This includes the growth of practices such as voluntary benefits, total reward and flexible benefits, typically used by larger organisations to help attract and retain talent.

Setting aside the actual practices used, what are the priorities in communicating reward? At a basic level employees need to understand their current package and, if the information is available, the value of the total package. For example, are potentially costly benefits such as pensions and healthcare factored in?

Employees also need to know what to expect when performance or contribution objectives are achieved to maximise the motivation potential. Of course, where people have been rewarded for doing well, this also needs to be communicated in a timely way to reduce scope for demotivation.  Always consider who is being communicated with i.e. line manager with individual employees; CEO communicating to the whole company etc.  Finally, since communicating reward is such an extensive topic, we’ll revisit it again, next time focusing on employee segmentation - look out for this in a future issue later this year.

Take a look at the Tips section to see what needs to be included in your employee reward communications.

Tips: What Needs To Be Included In Your Reward Communication?

• Reward policy – Ensure that employees understand how their own package fits into the organisation’s overall reward principles and framework. Be clear on how this is aligned to the culture and values and, where performance pay exists, how this is managed.

• Reward structures – Communicate upfront how these structures operate in practice. For example, explain the pay ranges and benefits that apply to different job levels and how arrangements such as flexible benefits or total reward are managed.

• Pay progression – Make employees aware of the methods that affect pay progression, for example using banded pay ranges; spot rates etc. Line managers need to do this with team members taking account of personal performance or other measures that impact the potential to progress.

• Pricing and evaluation of job roles – If you use job evaluation or other means of evaluating job roles, explain how evaluations are carried out. When benchmarking or ‘pricing’ your jobs against the external market, it usually helps to make employees aware of the approach and frequency where appropriate.

• 2-way communication – Make this a priority since communicating effectively helps to build the psychological contract where employees feel valued by the employer who, in turn, is perceived to value the employee contribution.  High levels of commitment are essential to enhanced business performance.

• Involve line managers – They can make or break good communication and levels of engagement, so make sure that your managers are equipped to carry out the job effectively.

Website of The Month

This month we look at the communication & consultation part of the ACAS website. As the publicly funded employment relations service for England, Scotland & Wales ACAS provides practical impartial advice to employers, employees and their representatives.

Why look at the site? – As perhaps the most popular employee relations resource in the UK, the ACAS website contains a wealth of relevant information presented in clear English.

What works well? – Easy to access practical content on communication and consultation that supports ACAS's role in promoting good practice in the workplace.

What could be improved? – As a hugely popular site which responds to the needs of employers, staff and trades union representatives, it cannot be all things to all people.

Index of Just Rewards Newsletters From 2006 & 2007

This month we’re taking a break from our usual news items to bring you the index of the past newsletters and the range of reward topics covered.

December 2007 What’s on the Reward Agenda for 2008?

November 2007 Why does the debate For and Against Performance Pay continue?

October 2007 What is the Role of Job Evaluation in People Management Today?

September 2007 What is happening in Executive Reward Today?

August 2007 Just Rewards - Market Pricing

July 2007 How Does Reward Affect Engagement?

May 2007 What is Happening in Equal Pay?

April 2007 What are the Pros and Cons of Company Cars?

March 2007 What is the Role of Line Managers?

February 2007 Do Recognition Schemes Work?

January 2007 How Can Total Reward Differentiate You?

December 2006 Looking Back and Forwards (Review of 2006 & Preview of 2007)

November 2006 How Does Your Pay Structure Fit?

October 2006 How to Implement Reward Strategy?

September 2006 Focus on Bonus & Incentive Plans

August 2006 How Can You Use Flexible Benefits?

July 2006 Putting Pay to the Age Test?

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** Please note that our advice is provided as guidance only. If you need specific advice relating to your requirements, please call Reward First on + 44 (0) 1367 710 618. 

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