Why do companies reward people differently for different jobs at different levels?
Why do reward teams invest significant time and resource into designing reward strategies?
Why are employee reward packages designed in a way that’s unique to a particular organisation?
The answer is, of course, to drive performance.
But after you’ve selected who gets what, how and when, that’s not the end of the story. Reward has got to be communicated effectively and consistently to have a positive impact on performance.
Emailing people a total reward statement full of numbers once a quarter might give them all the need-to-know information, but it doesn’t create opportunities for proactive engagement or increase motivation.
If your organisation truly wants to harness the power of reward to improve performance, an effective reward communication strategy that speaks to your employees’ needs and emotions is essential.
Communication is vital for reward to have impact
To demonstrate the link between effective reward communication and performance, let’s look at share options which are commonly provided as part of senior executives’ total reward package with the understanding they won’t receive any money from shares for at least three years.
Of course, this agreement is put in place partly to make sure they don’t go off and work somewhere else in the near future, but it also ensures they have a “stake in the game” when it comes to an organisation’s growth and success.
The link between performance and reward is clear here, but in order for share options to have their desired impact on improving performance, communication is vital. For example, your senior executives need to know:
- The growth targets or other KPIs they need to hit
- How close they are to meeting or missing those targets at a given point
- Whether there is further reward opportunity if they exceed their objectives
- What the impact is on them and their teams if they don’t meet their targets
- How their role plays into the organisation’s bigger picture
Reward communication is the one area in which you’re communicating directly with employees about their unique relationship to your organisation.
To communicate effectively, everything needs to come back to the reason your reward package exists, as well as the role each individual plays in your company’s success.
Communicating the ‘why’ behind your reward package
Every business wants their total reward package to be compelling enough to attract and retain the best talent. A truly exceptional reward package will also align powerfully with your business’s values and purpose.
Even with a stand-out reward offering, if your communication doesn’t engage people on an emotional level, connect their individual role with the wider vision or the company, and make benefits and opportunities clear, it’s unlikely to have a tangible impact on performance.
When employees feel like rewards are provided out of necessity and don’t see how their total reward differs from any other company, they don’t value it.
When they don’t understand their benefits, they don’t use them.
When they aren’t aware of the connection between their performance and their opportunities, they don’t engage.
The biggest challenge for reward teams is to effectively communicate in a way that breaks through a growing culture of expectation around reward. Each element of the total reward package must be made relevant to employees' lives.
Connecting employee reward to your company values
It’s not enough to reward employees based solely on meeting targets to gain commission or bonuses. To realise the power of reward as a performance driver, innovative reward packages must align with company values and be communicated in a way that inspires and engages.
When a company’s reward package is aligned to their values, targets become as much about what your employees achieve, as how they achieve it. In other words, reward aligns with behaviour and attitude.
However, it’s not enough to pin a set of values to a wall, telling people they have to be “collaborative” or “passionate” or “ethical”. You have to communicate what this looks like, in a way that’s tangible and measurable, if you want to drive cultural change and increase motivation.
This is the way to move your reward communication from informative to inspiring. That’s when reward truly becomes an enabler for performance.
The direct impact of reward communication on performance
Flexible payment options are a powerful example of how reward communication can directly impact performance and drive company-wide behavioural change.
For example, if you’re presenting employees with the option of taking a higher salary and smaller bonus versus a smaller salary and higher bonus, you need to connect this choice with what it means to them and their lives.
Understanding what flexing their pay might mean in terms of their specific life goals – such as having a baby or saving for a house – can make a huge difference to your people’s sense of security and opportunity, as well as assuring them you have their best interests at heart.
When employees fully understand the level of flexibility and control they have over their reward and its impact, they feel empowered. This has a big impact on attitude and motivation.
Designing and communicating your reward package in a way that gives people a sense of flexibility and control, sends the message you're expecting them to be self-starters who are comfortable making their own choices and decisions.
You’re telling them they won’t find themselves in a micro-managing environment in which they’re handed information and work to do. You’re signalling that you want everyone to be involved and take ownership. Now, you’re nurturing a culture of empowerment and entrepreneurial spirit through your reward communication.
The power of reward can only be fully realised with excellent communication. For your employees to buy into what you’re offering them, they need to understand the reason your reward package exists, what it means for them, and what’s required of them. It’s only when you focus on clarity, inspiration, and individuals that you can truly inspire loyalty, drive cultural change, and improve performance.
Looking for support with your reward communication? That’s what we’re here for.
Get in touch with us and let’s have a conversation.