In our reward training courses we often refer to ‘which way the pendulum is swinging’ to introduce discussions about trends in reward and recognition. With the start of the year being a good time to take in new ideas, we would like to put forward our views on trends in 5 areas that we see shaping the reward and recognition landscape in 2021.

It is important to note that whilst COVID-19 may have accelerated some of these trends, our observations reflect wider changes that were already underway even before the pandemic.

So, here is how we see the pendulum swinging…

Wellbeing

What was already a dominant topic on the reward and people agenda before the pandemic has taken on even greater importance – and, to some degree, has targeted efforts in a few areas of what is a vast domain.

Front-and-centre of wellbeing conversations at the moment are efforts to help individuals at all levels of the organisation cope with the impact of the pandemic. Beyond new/amended policies, Employee Assistance Programmes and other measures, priorities should remain focussed on providing support that people need (but may not always ask for) and, overall, showing empathy and compassion.

From a mental and emotional wellbeing point of view, organisations should look to provide spaces for sharing, getting support and even just switching off. Another priority should be to enable managers and peers to provide support when needed. Finally, role-modelling and open sharing from the top seems to help with embedding mental wellbeing in the organisation.

In terms of financial wellbeing, we see a lot of value in exploring options for education to help manage money and debt over a difficult period, as well as facilities – to the degree that is possible – to provide relief for income shortfalls and significant unforeseen expenses (e.g. fixing a broken boiler). This can demonstrate to employees that organisations are doing what they can to support those in need at a time when pay budgets are being squeezed.

In addition, flexibility in working patterns, ensuring employees have the right set up to work safely at home or in the workplace, and encouraging activity and taking time off work will also help protect the minds and bodies of staff.

Job evaluation

Hand-in-hand with a review of pay structures we have seen a lot of activity on job evaluation, especially around the introduction of a wider variety of methods to underpin pay and grading structures.

Historically, organisations have been inclined to use analytical points-based job evaluation methods to underpin pay structures and other people processes. Whilst providing a good degree of objectivity and rigour to job evaluation, these methods can be unnecessarily complex, costly, opaque and distanced from the business, often creating a ‘pay-for-points’ culture.

More recent thinking around job evaluation is steering organisations towards contribution-based models. This approach is highly intuitive, cost-effective, much more transparent and business-friendly – and still robust and reliable to produce defensible job evaluation outcomes that effectively support reward and the overall people agenda.

Performance management

With a YouGov survey showing only 26% of UK employees believe traditional performance appraisals are useful, and ways of working and employee expectations changing, it is no surprise that organisations are reviewing their approach to performance management.

What started with conversations about the removal of performance ratings and a move towards more ‘fluid’ systems, has now evolved into a wider conversation about how performance management can better support employees and employers.

One option that has been at the centre of our client work is ‘performance development’. This represents a clear departure from systems based on outdated thinking, fruitless interactions and flawed links to reward. Instead, performance development brings a future-oriented, employee-led approach focussed on enabling employees to do their best work (not on how best to use ‘carrots and sticks’ as motivational tools).

Performance-related pay

The more work we do with clients, the more convinced we are that the “pay drives performance” mantra is very open to challenge, if not altogether wrong (in some cases).

In terms of links to base pay, outcomes with little differentiation - often based on inconsistent and unreliable performance management ratings - typically do more harm than good, and sit at the heart of perceptions of unfair pay. Consequently we are seeing a clear move away from having ‘hard’ links between performance outcomes and pay increases.

As for incentives, whilst we still see a place for them in the reward mix, the reality is that in most organisations incentives are due a re-think. Key aspects of line-of-sight, control, timeliness and governance are being overlooked, resulting in a failure to deliver the desired results.

Amongst several interventions, we have found that articulating incentives with recognition efforts, including behavioural measures in incentive schemes and re-balancing individual and collective awards can help improve the effectiveness of incentives.

Thinking of Winston Churchill’s quote about “not letting a good crisis go to waste”, the current climate presents a good opportunity to try something new, think about the purpose of performance-related pay and what it may look like in the future.

Recognition

Recognition is not new by any means, but we definitely see a new era for recognition starting to unfold. With well-established platforms available in the market and no shortage of vouchers and other schemes to drive recognition efforts, we still see clients asking “how come this isn’t working?”

Therein lies the problem. There has been too much focus on the mechanisms to deliver recognition, and not enough on what really motivates employees.

The reality is that everybody is different and therefore a one-size-fits-all approach is unlikely to work. So involving employees in the design and operation of recognition programmes, building flexibility into them and always keeping the human touch should be the pillars of the recognition agenda.

From there, you are likely to find many options that are more cost-effective and have a bigger impact than what you are currently doing. To be clear, we are not advocating the end of recognition platforms, we are just emphasising the importance of having a clear purpose to shape recognition, including the acquisition and configuration of options these platforms offer.

Most importantly, in times like these when many of us can be stretched and maybe even struggling a bit, a kind word of encouragement or a well-timed and sincere gesture of gratitude can be all it takes to keep us going. Let’s not forget that.

If you wish to talk in more detail about any of the ideas in this article, or if you need an extra pair of eyes or hands to help you shape your plans, just get in touch.

Juan Novoa, Consulting Lead at QCG - February 2021