The recession and the subsequent sluggish recovery changed the way companies approach reward programs, particularly at high-performing firms, a professor said April 29 at the 2013 WorldatWork  Total Rewards Conference in Philadelphia.

Organizations have an increased focus on increasing compensation effectiveness, particularly after economic fluctuations, placing greater emphasis on future rewards than concentrating what worked best in the past, said Dow Scott, a human resources professor at Loyola University in Chicago

A survey of 303 senior rewards professionals conducted by Loyola University, WorldatWork and the consulting firm Hay Group found that many top companies not interested in what competitors were doing, said Thomas D. McMullen, Hay Group’s North American rewards leader. Instead, there was interest in what other top companies had planned for the next few years, said McMullen, who presented a workshop session with Scott.

Exceptionally performing companies look to the future of rewards practices as a means of growth, in part by measuring the return on investment of reward programs now in effect, McMullen said. A small percentage of other companies measure the return on investment of reward programs, probably because most regard rewards as a cost rather than an investment, he added.

Other companies struggle to balance their rewards programs with what they would like the programs to achieve, McMullen said. For example, while a majority of organizations expressed interest in balancing employee and organization reward concerns, few firms solicited employees to see what they wanted in such programs, McMullen said. 

“Once you understand what employees value, you can readjust your programs,” McMullen said. “You can see what employees value and move money into those programs.”

The survey also found that larger companies focus more than smaller firms on enacting consistency in reward practices. For example, 74 percent of companies centered on market-pricing processes and 62 percent were concerned with long-term variable pay program consistency.

By Laime Vaitkus