Hay Group Study Finds Disconnect Between Employers and Employees on Understanding Reward Programs

Business Wire, Oct 20, 2008

- Most Companies Don't Evaluate Rewards Communication Program Effectiveness -

PHILADELPHIA -- A new Hay Group study finds that only 33% of companies believe they communicate their reward philosophy and strategy effectively to employees - yet 80% believe reward communication has an effective or very effective impact on the organization's performance, employee satisfaction, retention and employee engagement. "When times are tough economically, it is more important than ever for companies to clearly communicate their commitment to employees," said Rich Sperling, a senior consultant with Hay Group. "Employers can leverage a variety of financial and non-financial rewards to engage employees during tough times when budgets are tight, but communicating and reinforcing those messages through a variety of channels is critical." The study was conducted by Hay Group, WorldatWork and Loyola University Chicago, and surveyed approximately 400 compensation and HR professionals in the U.S. from a cross section of industries.

"Rewards programs are one of the largest controllable expenses for most companies, but most spend little time or resources evaluating program effectiveness or reinforcing its value with employees," said Sperling. "At the end of the day, the investment in a solid communications campaign is minimal when compared to the investment a company makes in employee reward programs - and it can make all the difference. An average rewards program with robust communications tends to be more successful than an outstanding rewards program with poor communications."

Key findings from the study - and corresponding opportunities to improve reward communications - include:

* Few companies formally evaluate the effectiveness of their rewards communications. In fact, 39% of respondents conduct no evaluation. Only 10% pilot test their programs before implementation. Organizations that do evaluate their reward communications, and particularly those that pilot test them, rate their programs as more effective than those that do not.

* Marketing strategies and tools are highly effective in communicating rewards, but aren't often used. Only 25% of respondents target communication to specific employee groups, but of those that did, 74% said it was an effective or very effective strategy.

* Nearly half of the survey respondents offer employees training on investing for retirement. Of those, 79% say the training is effective - but only 29% of their employees participate. In order to engage employees in managing their benefits, organizations need to take the time to understand the needs and characteristics of the audience and tailor key messages to the diverse interests and motivations of the employee population.

* Total reward statements were identified as one of the most effective methods for communicating about benefits, and the philosophy and strategy of reward programs, but they were the least prevalent method used for either program with 68% and 69% of companies providing these statements respectively.

"While total reward statements are becoming more common, they are often not used to their full potential. These statements provide an excellent communications opportunity for employers to clearly explain their programs and strategies instead of simply offering raw facts," said Sperling.

Sperling also offers a few more general best practices for improving reward program communications:

* Find out what employees want and need to know and focus communications there

* Simplify by limiting the number of key messages

* Reinforce key messages through regular communications and through a variety of media

* Gain the support of line managers and actively involve them in communications

* Evaluate the effectiveness of reward communications

"Employers have the opportunity to engage, motivate and retain workers through their reward programs, but the devil is in the details - knowing how communications are interpreted is critical," said Sperling.

About Hay Group

Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.

For more information, including requests for interviews, please contact Aven James at 212-584-5472 or aven@blisspr.com.