Posted on August 19th, 2009 in Industry News
Total rewards, which includes remuneration, incentives, benefits, and other EVP elements (such as work-life balance, career development opportunities, and performance recognition), is no longer the exclusive responsibility of remuneration specialists in companies. It has become a top management priority, with CEO’s and Boards becoming far more involved.
Rewards can constitute up to two thirds of the company’s total costs, and it is therefore no surprise that progressive companies increasingly view rewards as an investment rather than a cost component. This implies that these companies are measuring what levels of performance they receive in return for the rewards paid to employees, and therefore what the return on their investment is.
One of the most fundamental consequences of the recent global recession is that companies now need to do more with less resources. There is a greater focus on cost-consciousness, effectiveness, efficiency, and performance-driven awards. In a far more competitive environment, companies have to adapt quickly to survive the new post-recession realities.
In order for businesses to succeed it is therefore to have, and continue to produce, employees who are both fully empowered and engaged, and to reward them more closely in line with their individual performance towards achieving greater organisational objectives.
This calls for a clear shift in focus from paying people well for the jobs they perform, to getting an optimal return on the investment made in human capital. ROI has become an important metric in rewards management, and needs to be used and measured better in future.
