Organisations may have a generous, fair and innovative reward system but if it’s not well-communicated it will have little or no impact on recruitment, retention or productivity.
However, most companies consider and approach pay as a private matter, and only provide pay information when required to do so by legislation. Well over half of employers surveyed told the CIPD they “very much preferred to keep pay information as confidential as possible” and most agreed their organisations favoured the least transparent approach to disclosing pay information.
Historically and culturally this may be understandable but it makes little sense today and represents a missed opportunity to communicate how employees have been, and can be, rewarded for contributing to business success - the point of the exercise.
CIPD findings also underline the basic importance of explaining pay decisions, with employee satisfaction higher - even if no increase is received - when an explanation is given. Their latest Employee Outlook reports that under half (47%) of private sector employees received an explanation of their 2014 pay decision.
“We are unable to explain why more employees don’t receive an explanation for a pay rise,” says a clearly baffled CIPD. “This finding is odd given that [surveys show] a relationship between employee satisfaction with the decision and receiving an explanation for that decision.”
Communication is thus a major issue for pay and reward at every level. HR professionals identified the main risks in managing reward systems as:
- employees do not appreciate the value of the total reward offering
- reward failing to engage employees
- inability to increase pay levels due to budget constraints
- employees do not understand performance and behaviour requirements
- incentives do not motivate.
The top ten risks also included, “inability to communicate desired performance and behaviours”; “reward not perceived as fair”, and “line managers’ poor understanding of reward”, underlining the internal communication challenge.
CIPD research also finds that nearly three-quarters of employees say their organisation offers no form of financial advice although over half its survey respondents offer access to debt advice and/or counselling, underlining that employers should not take for granted all employees understanding the true value of reward packages on offer.
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