Rewarding employees boosts company growth

By Rashika Fazali

Companies can achieve higher production firstly if their employees are motivated and secondly if these employees are rewarded well. Many organisations today have addressed the need for good rewarding schemes in order to have efficient organisations. This goes hand in hand, but how can we change the mindset of the people to understand that rewarding is a key factor in order to maintain a successful organisation.  

At the discussion presenting ‘Demystifying compensation, new age strategies and systems’ held at Hilton Colombo Residences on 8 April, organised by Association of Human Resource Professionals (HRP) Sri Lanka, Unilever HR and Corporate Relations Director Udayan Dutt spoke on the subject of ‘Rewards Demystified’, pointing out that employees are not looking at the traditional compensation package anymore, but compensation in terms of a promotion and targets. He said, “The career has to be rewarding. At the same time, it is a lot to produce a business. At the end of the day, we are running a business that makes money.”

Dutt noted that an employee wants to do three things: spend and sustain, save, and splurge. However in order to splurge, he needs to have extra funds other than his fixed salary. Splurging in this sense means to spend money on something the employee feels good about such as an investment in something. He is quite unlikely to do this with his fixed salary.

On the other hand, well performing employees want to be also differentiated among others and in order to do that organisations should have a good rewarding scheme. He revealed that many employees like to be recognised as one of the few who have managed to receive a bonus. Stating this could give employees a sense of respect and motivate them in future to achieve better.

“A reward can be used to drive the purpose for the organisation,” said Dutt. At Unilever’s, their reward strategy boasts of looking into four areas; pay for performance, strategically aligned total rewards, market competition and ease of understanding and delivery.

Pay for performance will look at key areas of rewarding employees based on their performance. This area also looks at attracting and retaining talent alone. Under strategically aligned total rewards, Unilever’s focus is to see if their business and operative objectives are attained. Their third reward strategy, market competition focuses on reward opportunities, peer groups and position of fixed elements while under ease of understanding and delivery they look at understanding reward mechanism and its contribution to the organisation’s success.

As benefits do drive employees to work efficiently, companies have areas and certain reward challenges to overcome. Dutt stated companies have to first make a note of the cost of the business versus their investment on employees such as if the reward is a short or long term, cash or cheque, fixed or varied. He suggested that employees have benefits that engage the family as it works really that way. “It drives retention,” stated Dutt.

Organisations also have to look at varied reward expectations and career progression because employees work to get promoted to a higher position. But at the same time, there is also a global need for talent which is driving people out of the country for better jobs, so organisations have to look into who they want and how they want to reward.

Companies also have to make note if they will be handing out instant rewards – do employees have to wait till the end of the year to receive their reward? It quite well depends on the salary structure of the organisation.

Rewards give out efficiency and further results. Therefore company should have good rewarding initiatives such as having the right organisation structure. By having grades of hierarchy, benchmarks internally and externally and a job evaluation mechanism, employees have a chance to get rewarded in terms of career growth.

At Unilever’s, their job evaluation framework consists of seven components that analyse the job at hand – expected work, resources to be managed, problem solving, change management, teamwork, environment and time scale.   

Dutt further mentioned that they have signed an agreement with a certain plant to enable performance based pay.

Pix by Upul Abayasekara