How To Build A Reward Framework That Works For Your Business
A clearly defined reward framework is an essential part of a company’s success; not only does it give employees more motivation to work harder and smarter, but it also aligns employee incentives with overall Company goals, ultimately helping to achieve the overall Company strategy.
If you’re still unconvinced of the importance of a reward strategy in business – or just don’t know where to start – this blog post will provide practical advice on building a custom framework that works for your unique business structure.
Why is a reward strategy important and what business impact does it have?
The impact of a well-designed reward strategy can be seen in improved employee satisfaction, attracting talent who can see what the employee deal is for them, increased productivity, and retention. Plus, who doesn’t enjoy being rewarded for a job well done? A reward strategy is a win-win for both employees and the company. Designed effectively, it can also fosters a sense of loyalty and establish a culture of appreciation. From bonuses to flexible working arrangements, there are a plethora of reward options available. However, developing a successful strategy requires a deep understanding of the business and its goals.
Is a reward framework going to cost a company a lot?
Not necessarily. In fact, some of the most effective rewards are non-financial and won’t break the bank. Think recognition schemes, flexible work arrangements, or professional development opportunities. Also think about those benefits that you currently offer employees and what the uptake is for these – are they truly valued, modern and fit for purpose, when was the last time they were reviewed and changed? We find quite often that when reviewing benefits in companies that cost savings can be made by reviewing what’s in place before making any recommendations.
Non-financial rewards can boost employee morale, motivation, and retention without costing the company. Of course, offering some additional perks and benefits can set a company apart and attract the best talent. So, don’t be afraid to get creative and think outside the box when it comes to crafting a reward strategy that fits your company culture and budget.
Establish clear goals and objectives for the reward framework
What are your key pain points? Retention, attraction, low engagement, complaints about salary or simply not knowing where your company sits amongst your competitors?
Once you’ve established what you are trying to achieve, goals and objectives for the framework can be set. This will help ensure that it is a long-term strategy for employee rewards and is fair, supportive and rewards appropriately. The ultimate aim it to design an effective reward package that matches the goals set.
Consider it all.
• Base salary
• Bonus schemes
• Frequency and method of external benchmarking
• Share schemes
• Core benefits
• Flexible benefits
Communicate the reward framework to employees and key stakeholders
Effective communication of a reward plan is crucial to ensure employees and key stakeholders understand the company’s commitment to recognising and rewarding excellent performance.
Clear communication of the reward plan to employees and key stakeholders creates a sense of transparency, builds trust, and helps employees better understand their role in the success of the company. Therefore, it’s essential to craft a message that is informative, engaging, and straightforward. If your employees don’t understand it, it’s lost it’s impact.
Track the success of your reward strategy through metrics and data analysis
How can you measure the effectiveness of your efforts? Metrics and data analysis. By tracking the success of your reward strategy, you can better understand what motivates your team and what areas may need improvement. Metrics such as employee retention, productivity rates, and engagement levels can help you gauge how well your reward system is working. By analysing this data regularly, you can adjust your approach and continuously improve your reward framework for the betterment of your team and company. Don’t just hope your reward framework is working – track it with metrics and data analysis.
Having an effective reward strategy is essential for any business to succeed in this modern age. It should not be a one size fits all approach; it needs to be tailored specifically to the company.
Taking a holistic view, understanding the culture and taking into account current employee engagement are key to developing an effective rewards strategy. If you’re having difficulty putting together such a strategy, reaching out for expert advice is always a good idea; sometimes having someone from outside the company can be beneficial.
Finally, don’t just set your rewards policy, forget about it and assume that everything is running smoothly. Reviewing employee benefits, salaries and recognition on a regular basis can help ensure your reward strategy remains up-to-date and successful.
Utilise market data to support your decisions
Using the most relevant market data helps to inform your decision making. It ensures that businesses are aware of the current market trends and enables you to act to retain and attract talent through:
1. Offering a competitive package in an ever moving market
2. Retaining top talent through active and regular benchmarking
Engaging with experts in this field, ensures that the most appropriate survey data is used.
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