The last issue of PorkNetwork included an article about the importance of identifying and implementing the right rewards program for your employees. It explained that an effective program that keeps employees engaged in your business should be based on direct feedback from your staff in terms of salary, benefits and rewards.
Richard Kantor, partner at AON Hewitt and Tim Glowa, associate partner at AON Hewitt use Conjoint analysis to measure and evaluate employee preferences to help businesses implement successful employee-benefit programs. However, you can incorporate their ideas in your pork operation.
They suggest you and your management team take time to consider the following questions:
- What is the optimal reward structure for our employees?
- What are the key reward elements driving preferences?
- What is most important to our employees and how does it differ by segment?
- How does our brand or image impact reward preferences and tradeoffs?
- How much of our reward (benefit) spend is wasted on no-value or low-value items?
- How do preferences and costs vary by business unit, geography or other factors?
- What are the key opportunities for change, and how might employees react?
The answers to these questions will provide the empirical data needed to determine change priorities, say Glowa and Kantor.
They believe there are four primary keys to success related to a Total Rewards program:
1st: Use the broader canvas to reward for results.
People often gain job satisfaction from factors that have little to do with the job itself.
“Making sure that employees are happy and feel that they are appreciated builds loyalty and productivity,” writes Leigh Thompson in Making the Team – A Guide for Managers. “Leaders should not approach this passively. It can cost virtually nothing – just a little time, energy and forethought.”
Kantor says the broader canvas as shown in the graphic below will help people see what’s important and how they can take advantage of it.
2nd: Build manager capability around performance and reward.
“Perceived fairness is a 20-times better predictor than level of reward,” says Glowa. “People are more concerned that they are getting [the shaft] compared to their counterparts than their salary level by itself. Transparency is closely linked to trust.
In addition, there is a direct positive correlation between a manager’s or owner’s ability to explain the company’s reward structure and the employee’s positive perception of compensation.
3rd: Coach managers to deliver the right messages.
According to Glowa and Kantor, high performers need to feel motivated, successful and special; solid contributors need to feel motivated and successful, and under performers need to feel motivated.
Most managers fall short in helping under-performers feel motivated, solid contributors feel successful and high performers feel special.
“We need to make sure we’re providing the right signals to each type of performer,” says Kantor. “Businesses must find a way to help managers understand the people with whom they work. It’s not about being manipulative – it’s about being smart and helpful. Some managers are intuitively good at this.”
4th: Rethink your framework for Total Rewards
“Consider a target,” says Kantor. “The outside circle contains ‘access-only’ rewards, provided by the company. These rewards leverage economies of scale for attractive pricing or ease of acquiring.”
The next circle includes basic, or benchmark, rewards. Kantor explains these are part of the fixed, core package. They are usually benchmarked to the median and are not used to differentiate employees.
The next circle in toward the center represents “contingent rewards.” Kantor says these rewards are contingent upon certain results, performance or behaviors. “Examples can include variable pay, advancement opportunities or wellness credits,” he says.
“Your ‘differentiators’ are the bulls-eye in the center,” says Kantor. “Limited in number, these are the rewards a company uses to create competitive advantage in its total rewards program. In other words, it’s what you seek to be famous for and how you set yourself apart from competitors.”
Too many companies have high aspirations for creating rewards for employees, but very poor execution, notes Kantor. “Nearly all companies are trying to differentiate around the same basic five or six things,” he says. “Organizations need to have high execution, particularly in the center of the Total Rewards circle.”