Non-financial reward

1. Non-financial reward • ‘Total reward’: a medium through which employers may frame extrinsic and intrinsic reward as a balanced portfolio • The evolution of contexts for reward and ideasregarding ‘employee engagement’ (active, not passive, reward) • The notion of a ‘compelling employment proposition’ – which is easier to state than to deliver • Reflects strategic thinking: • a clear focus for reward resource investment • comparison with competitors’ offer in the ‘war for talent’

2. THEORY: • holistic view of employees – as persons, not • ‘resources’ • reflecting the ‘hierarchy of needs’ – and/or a • sophisticated consumer culture in which ‘talent’ • segments expect to mix a ‘reward bundle’ tailored to • their personal situation • ‘talent market segmentation’ analysis to optimise • investment in different groups with changing traits • social exchange theory predicts that employers who • demonstrate a personalised commitment to their • employees will be rewarded in return with ‘affirmative • commitment’ and ‘discretionary effort’ – ie beyond a • ‘continuance’ relationship (simply ‘turning up’) at • work

3. Beyond pay and benefits: a leading-edge employer view on factors surrounding a ‘strategic’ approach to reward management: • ‘We were missing out on a significant part of our “employment deal” – partly in terms of the investment, partly in terms of people not being able to calculate the true worth of their package, and partly because there was a range of elements that people might really value but that weren’t really “communicated”. We realised the importance of process, reflecting the dynamism involved: while we might talk about pay and benefits, as though these were static, the real difference was being made through flexibility in how they were applied. As a result, we formed a deliberate plan to talk to our existing people, and to prospective employees, in much broader terms about the total package.’ • Tim Fevyer, Senior Manager, Reward, Lloyds TSB DISCUSSION: What practical actions does this analysis suggest to you?

4. Total reward factors which combine to comprise the work experience: • acknowledgment – from informal ‘thank you’ to • formalised recognition schemes: a form of • competence development feedback • balance (of work and life) – addressing work–life • conflict • career or professional development – work • management to fulfil the employee’s desire for • personal growth and belonging • workplace environment and culture – style of • management and opportunities for employees to • participate in managerial decision-taking

5. Total reward – an overview With acknowledgements to Helen Murlis and Clive Wright

6. The business case for the ‘total reward’ approach BUT: Sophisticated efforts to achieve employee engagement imply corporate leadership with the capabilities and willingness to act in ‘emotionally intelligent’ ways. Critics warn of tactics that may be perceived as attempting a form of ‘voluntary coercion’.

7. Summary • Shift of emphasis from pay as the compensation, with fixed benefits, a low-cost supplement, to a synthesis of ‘total reward’ as a potential behavioural driver. • Flexible benefits may go some way to addressing workforce diversity. But the logic of total reward is promoted by commentators as scaffolding for a distinctive ‘employment proposition’. • The interpreted value of and messages in that proposition may vary by recipient. • Grounded in the theoretical assumption that employees are not solely economic agents – they look for meaning in and control over work and a balance with their ‘other’ life. • Ethical and moral dimensions of ideological initiatives intended to secure voluntary identification between individual employees and the organisation need to be understood and acted on in framing and applying policy choices. CIPD Employee engagement factsheet accessible from this web link: http://www.cipd.co.uk/subjects/empreltns/general/empengmt.htm.