Are we sensing a trend of demanding or frustrated employees? Are they feeling dissatisfied? Are they revolting? If so, do you blame them?
In the last few years, we witnessed events unfold at both local and global levels urging us to wisely reflect on employee issues especially related to compensation and rewards. This is mainly because there still is a lag in the alignment of rewards to corporate strategies and the alignment of pay to performance and this is precisely why employers are finding it hard to tackle the way they pay their employees. More weight used to be placed on longevity; however, the trend is shifting towards performance to effectively handle career advancements and promotions not just with compensation and benefits but also with recognition and appreciation. In the dynamic environments today, employers are also placing a high value on good and ethical behaviour because it is a low cost but may have very high returns.
A wide acceptance has been witnessed at a global level on the need for governments not only to monitor the compensation and reward but also to control incentive practices that threaten the viability of companies or one that poses risks to the economy. There is a growing demand for designing a robust reward system and companies are trying to link stakeholder interest, economic stability and operational risks in an effective way that aligns behaviours that are fundamental to the company’s interest. There is nothing wrong of a reward system that puts cash compensation at the top of the list, but there should also be an incentive compensation plan that is directly linked to the goals of the company and this is the path towards strategic reward.
Today, some employers take on a tactical and even a defensive approach to cash compensation for top performing employees because competition for talent has returned with a vengeance especially for those who play a demanding role and are considered highly strategic and accountable for success and growth. The trends are remarkable depending on the sector; some have witnessed developments that were dormant for years whilst other sectors are still set back but bottom line is high performers are doing pretty well wherever they go whether they stay in Oman or work overseas.
It is tricky to design a strategic reward system considering all its moving parts but ideally it should be based on defining who you market, how competitive you want to be, what you want to reward and what talent you want to attract. Without a well-crafted and sound business strategy, this will put your reward strategy in an unfavourable position.
It is not an option anymore to have a reward strategy; it is a necessity and a strategic decision to align compensation and reward with a sound risk management and a long term value creation. Today, organisations want to maximise performance dividends, initiate sound talent management to link pay to performance, develop unique employment propositions, and implement the element of risk management, control and flexibility in their reward strategy. If you have a reward system that needs fixing, please do not wait, this could ultimately lead to a failed or successful business.