Too often when companies design reward systems for their employees they don’t take into account the three main elements that are important to consider – desired outcome, employee motivation and company budget.

According to Mercer Human Resources Consulting “there is no one-size-fits-all solution” for a total rewards system because there are differing perspectives depending on if you are the employee, employer or shareholder.

However, what is key is that in order to develop a total reward system to fit your organization you first need to consider what skills and behaviors you — the employer — need to  run the business, what your employees value, and what your company can afford to spend.

Begin by aligning your rewards with your business objectives. Next ensure your employees understand – have a line of sight between — the company reward system and the company goals. Finally, reward individuals – base and variable pay – who bring value to the organization and get the desired results.

Keep in mind that most organizations can easily define what employee competencies they require to run their business based on assessing why customers come back and establishing a budget is part of the everyday business landscape.  However, identifying what employees value can be more tricky.

According to a 2005 Mercer survey incentive pay is not necessarily a strong motivator unless employees perceive a high enough upside. Add to this employee cultural and generational differences and developing a reward system can take a lot of time and thought.

That being said, a total rewards system can go a long way in reinforcing the achievement of company goals by demonstrating a relationship between performance and pay.

This entry was posted on Friday, May 25th, 2007 at 10:30 am and is filed under Compensation. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site. Your comments will appear immediately, but I reserve the right to delete innapropriate comments.