HR overhauls reward as share options fall

Companies in sectors suffering in the economic downturn are having to look
beyond share options and bonuses in order to motivate and retain staff.

IT firm Compaq is looking to introduce low cost alternatives such as tickets
for sporting or arts events, public recognition of good work by managers,
letters of thanks, certificates and even flowers.

Mike Taylor, deputy HR director at Compaq, said, "We’ve got a very
tough economic climate, coupled with a possible merger with Hewlett-Packard.
People are very insecure so we have to make sure they remain motivated more
than ever. We have to look at creative ways to motivate people."

Taylor told delegates at the IIR’s Performance Management Conference in
London last week that post-11 September many companies’ share schemes are
losing value and are becoming less effective motivational tools. Salaries,
bonuses and employer pension contributions are also suffering.

He said, "The key to staff gifts is that they are spontaneous and
unpredictable. Of course money is important because you have to pay the market
rate to attract the best people. But it is more important to get to grips with
organisational culture and get all the leaders working well and to motivate

Mark Childs, global head of compensation at Fidelity Investments and chair
of the conference, believes HR teams in struggling companies will be walking a
difficult path. "When times are good HR can become complacent but a
downturn compels line managers to communicate more effectively. However, there
is a fine line between low- cost rewards and patronising people," he said.

British Airways recently implemented a recognition scheme promoting
managerial praise of staff as well as gifts and holidays.

Internal research found that verbal acknowledgement of good work was the
most appreciated form of reward.

By Ross Wigham

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