Poor reward communication hits performance

Employer inability to tell staff about their rewards could damage organisations, claims CIPD research.

A survey of HR professionals by the Chartered Institute of Personnel and Development (CIPD) has found that sub-standard communication of reward is leading to poor organisational performance.

Almost 300 respondents identified it as the most common threat, and the survey concluded that money is being wasted because poor communication of pay and reward means that budgets are being spent without staff fully understanding what they and their teams are being rewarded for.

The survey also found that risks associated with rewarding staff are becoming more of a threat, and need greater thought in the current economic climate. The CIPD predicts that more attention will be paid to the risks around cash-flow management, pension costs and investment strategy management.

In particular, the impact on employee engagement of pay freezes, cuts in employee benefits and restructuring of reward packages is a cause for concern. Poor employee understanding of reward was ranked eighth in the survey’s predicted top 10 risks for 2010. The inability to adapt reward policies and practices to the changing business environment was seen as the greatest potential risk.

Charles Cotton, CIPD reward adviser, said: “2010 is going to be a very tough year with the key reward challenges being around dealing with pension commitments, as well as looking at changing the wider approach to reward, communicating this to employees and keeping them engaged.”

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