Study: Improvements Needed in Communicating Employee Reward Programs

Only 33 percent of companies believe they communicate their reward philosophy and strategy effectively to employees, according to a new study. Yet 80 percent 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, a consulting company. "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," Sperling said. "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. Thirty-nine percent of respondents conduct no evaluation. Ten percent pilot test their programs before implementation.
  • Marketing strategies and tools are highly effective in communicating rewards, but aren't often used. Only 25 percent of respondents target communication to specific employee groups, but of those that did, 74 percent 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 percent say the training is effective -- but only 29 percent of their employees participate.
  • 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 percent and 69 percent 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," Sperling said.

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.

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