Efficient organizational structures, clearly defined business strategies and strong cultural values work together to define a direction for an organization. An informed, engaged, performance-driven workforce powers it. The study found that just one in three organizations feels rewards to employees are closely tied to business strategies. Merit salary programs are, by far, the most common type of performance reward plan used today. However, the survey found that only 10 percent of the respondents are highly satisfied with their merit pay programs, with two-thirds saying they were just somewhat satisfied.
Awareness is undoubtedly a part of the problem.
Only one-third of the organizations feel their overall total compensation philosophy is clearly articulated to employees, and only one in four feels employees have a high understanding of the details of actual pay programs. The survey's findings reinforce the need for established companies to revisit their total compensation philosophy to assure it represents their current objectives and circumstances. Careful consideration of these issues in changing organizations will result in new total compensation elements designed specifically with the intention of making business strategies work. The new focus on the human factor has led to a variety of creative compensation approaches designed to better align business strategies and employee reward systems. The key is getting the right mix of plans, combining refocused traditional and newer types of award programs.