Strategic reward management is an important part of any business, especially if you want to attract and retain hard working employees. In this blog, Centric HR will explain what exactly strategic reward management is as well as the benefits of implementing a strategic reward strategy in your business.
So, what is strategic reward management and why is it important? Strategic reward management is the implementation of reward strategies to ensure that there are clear measurements and guidelines in place. The guidelines are then used to reward employees when they reach certain targets or goals. The reward policies make sure that employees are rewarded fairly and consistently.
Keep reading to find out more about strategic reward management including why employees need a strategic reward management scheme.
- What is strategic reward management and why is it important?
- Why do employees need a strategic reward system?
- What are the benefits of strategic reward management?
- What are some examples of strategic reward management?
What is strategic reward management and why is it important?
Strategic reward management involves the implementation of company strategy alongside clearly communicated policies so that employees are aware of how everyone can be rewarded in a consistent and fair way. Research has found that strategic reward management can be a highly effective strategy for improving both motivation and performance in the workplace, as well as improving the efficiency of employees.
However, strategic reward management is different to total reward management because it focuses on the designing of policies that act as guidelines for how employees can be rewarded, rather than looking at aspects such as development opportunities or benefits packages. Strategic reward management is also used to support the long-term sustainable goals of a company, instead of focusing on quick wins.
Strategic reward management is important because it helps to make employees feel valued for their contributions to the business. By implementing clear company policies for reward management, you make it an equal opportunity for each employee to work for positive rewards. This helps to alleviate and rumour bias or favouritism towards employees and can be a lot motivating for them.
What are the benefits of strategic reward management?
When implemented within the company policy, strategic reward management can provide an array of benefits to businesses. From retaining talent to improving employee engagement, we have detailed the main benefits below.
|Attraction of Good Talent||By implementing a reward strategy into the company policy, you will attract good talent. This is because some of the best talents are looking for employers who go the extra mile to look after their employees and recognise their efforts.|
|Retaining Talent||Having a well-planned strategic reward strategy can also help to retain talent within your business. This is because employers feel as though they are more valued and respected, as well as feeling as though they have more to work towards.|
|Increased Productivity||It may seem very obvious, but strategic reward management can improve the productivity of your employees significantly. Employees feel more motivated towards their work because they are confident that their efforts will be recognised.|
|Increased Engagement||Reward management is also a great way to improve employee engagement. When employees are aware of the reward strategy company policy, they are more likely to be more engaged in their work and the success of the company.|
|More Focus on Long-Term Goals||Having a reward strategy can also encourage employees to focus on the long-term goals of the company rather than just day to day goals. This is a great way for your employees to think because it means they are prioritising the long-term success of the business and recognising any issues that may occur, in advance.|
Why do employees need a strategic reward system?
Employees require a strategic reward system so that there is written evidence of how they will be rewarded for their efforts. Without a clear reward policy in place, arguments may arise when employees feel as though they have gone the extra mile but received no reward. Having a clear reward policy alleviates any of the grey areas so that both employees and management have guidance and metrics to follow when implementing reward schemes.
What’s more, employees need a strategic reward system in place so that they know what to aim for. The strategic management policies should detail metrics and measurements for when employees will receive reward. Without this in place, employees will not even be aware that they can receive rewards, nevermind the types of work that will result in rewards.
If employees are not aware that such rewards exist, then they may continue to do the minimum that is required of them to get through the day. Employees require strategic reward systems for guidance and motivation within their roles. It is a similar concept with promotions; if an employee is made aware that there is an opening in a role that is just above them hierarchically, they are more likely to work harder and seek out that role.
What are some examples of strategic reward management?
Strategic reward management comes in various different forms depending on the goals of each business. Below we have detailed various examples so you can see which would work best for you.
Performance Related Commissions:
One very common example of strategic reward management is in the form of performance related commission. Quite often this is a system used in sales jobs because it encourages employees to work harder for additional sales. In some cases, sales jobs are completely commission based, which would require detailed hierarchical pay commission structures based on the number of sales that the employee brings in. Other sales jobs offer a reward based strategy which only provides commission if an employee achieves sales over a certain quantity. This type of reward system works well because employees know exactly what they need to do in order to achieve extra commissions.
Another example of strategic reward management is reward via stock purchasing. Stock reward schemes have become more popular with employees because they view it as an investment in their future. Stock reward schemes are when an employee is offered the opportunity to purchase stocks in their company for a specified lower amount as a result of their hard work. This can improve an employees motivation and engagement towards their work significantly because they begin to care more about the future of the company, as they are due to own stocks in it.
Strategic reward management does not always have to involve rewards in the form of payment. Often employees enjoy smaller, more personal rewards such as meal vouchers, event tickets or even an additional day of annual leave. This type of reward system is usually effective with lower level employees to help motivate them with progression.
Strategic Work Management at Centric HR
Centric HR are experienced HR Consultants in Staffordshire and Birmingham. Our team is here to support you with your strategic reward management requirements to ensure your employees are rewarded fairly and accurately for their efforts.
Get in touch with us today to learn more about our strategic reward management programme and how we can help your business.