Major Firms Discuss Their Engagement Efforts

Hay Group study focuses on companies’ success in viewing employees as assets and aligning their labor costs with new economic realities.

A recent study by Hay Group and WorldatWork confirms that the recent erosion of financial capital has led to a renewed focus on managing human capital, viewing employees as assets rather than just costs. Researchers found reward executives focused on the "here and now," first getting labor costs aligned with the new economic realities, then preparing for future growth.

The report revealed five key trends:

• From benchmarking to alignment. Firms have become less focused on what the market is doing and more concerned about aligning reward with strategy and performance. Amway International, for instance, is trying to "find the right balance between employee motivation, cost control and market competitiveness in our reward programs."
• Taking the employee's perspective. Employee needs and wants are becoming more important as organizations seek to maintain motivation in a tough climate. According to McDonald's Corporation, "We design our reward programs, invest in new programs and beef up current programs based upon the feedback we receive from our employees."
• Strengthening ties between pay and performance. Organizations in the study are looking much harder at the design of short- and long-term variable pay programs. Comments from Heineken reinforce this: "We ensure that the objectives in our STI program are broad, simple, quantifiable and measurable and that they accurately reflect the key performance fundamentals of our business."
• Total rewards. Employers are looking to intangible rewards in their quest to keep the workforce engaged when budgets are tight. Collective Brands plans to "provide much more focus on non-monetary forms of rewards and recognition. In tougher economic times, there will be a focus to provide recognition through non-monetary vehicles."
• The key role of the line manager. As firms tighten their belts, they are realizing how line managers can help reinforce the pay-to-performance link and communicate the value of the reward program. Microsoft is looking for "better support for managers to be able to better explain the reward programs and how they link to individual and company performance."

To download a copy of the complete 24-page Reward Next Practices report, go to www.haygroup.com.