Designing Strategy-Supportive Reward Systems in Organizations

Creating a strategy-supportive reward structure for an organization is an important task as it is a powerful management tools for gaining employee buy-in and commitment. Meanwhile, the key to creating a reward system is to promote relevant measures of performance that the dominating basis for designing incentives, evaluating individual and group efforts, and handling out rewards. In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. While businesses need to get more from their employees, their employees are looking for more out of them. Employee reward and recognition programs are one method of motivating employees to change work habits and key behavior’s to benefit a business.

As the strategy-supportive reward structure motivates and attracts the employee, designing the reward structure for an organization is quite complex. This is because the importance of the reward structure should define on the job and assignment in terms of the results to be accomplished and not just in terms of the duties to be performed.

A properly spelled out reward structure will emphasis all the below items in the process of developing the reward structure:

  1. Identification of company goals that the reward program will support: The team whom designing a reward program must identify the companies goals to be reached and the behavior’s or performance that will contribute towards the company goals and develop the reward structure which will attracts the employees to achieve the goals in order to be rewarded.
  2. Identify the desired employee performance or behavior’s that will reinforce the company’s goals: By identifying the desired employees performance or behavior’s that will help the company to achieve the goals, the team whom designing the reward program could include in the performance measurement and desired behaviors into the reward structure.
  3. Key measurements of the performance or behavior determination, based on the individual or group’s previous achievements: The team whom designing the reward program could benchmark the previous achievements of the individuals or groups in deciding the key measurements of the performance and improve based on the key areas which the company feels that in needs for improvement.
  4. Determination of appropriate rewards: The team whom designing the reward program needs to consider that the designed rewards is matching to the desired end result of the company. It is also important to consider that the rewarding for the both individual and group accomplishments in order to promote both individual initiative and group cooperation and performance.
  5. Communication of program to employees: In order for a rewards program to be successful, the reward program should be clearly communicated to each and every employee. As employees motivation depends on the individual’s ability to understand what is being asked to them, it is necessary for the company management team to explain and consistently remind them on the reward programs.

It is important for a company to identify and tie the right reward and incentives in the strategy execution. There are 3 techniques for winning sustained, energetic commitment of employees to the strategy execution process which is by providing incentives and an engaging in motivational practices that facilitate good strategy execution, striking the right balance between rewards and punishment for individual performance and lastly by linking employee rewards to strategically relevant organizational performance outcomes.

For the non-monetary approaches in enhancing employee motivation, companies could provide the following basics:

  • Providing an attractive perks and fringe benefits.
  • By giving awards and other forms of public recognition.
  • Rely on the promotion from and within whenever possible.
  • Invite and act on ideas and suggestions.
  • Create a work atmosphere of caring and mutual respect.
  • State the strategic vision in inspirational terms.
  • Share the firm’s critical information with employees.
  • Maintain attractive office space and facilities.

Linking rewards to strategically relevant for performance outcomes as define jobs and assignments in terms of the results is to be accomplished not just in terms of the duties to be performed but to focus on and reward results and not just the effort. It also creates a results-oriented work environment that focuses on what to achieve, not just on what to do. Besides, it also set strategically-relevant, quite specific, and is measurable on the stretch of performance goals that is difficult but achievable. Link the performance goals of each individual in an organizational unit to be the unit’s goals. The rewards and recognize as the success superior performance in accomplishing the goals.

There are also guidelines for designing effective incentive compensation systems. Some of it are the making the financial incentives a major, not minor, piece of the total compensation package. There are also incentives that extend to all managers and all workers, not just top management. Companies also have to administer the reward system with scrupulous objectivity and fairness. Furthermore, keep the time between achieving targeted performance outcome and payment of the reward as short as possible does help in achieving the desired companies’ goals through the reward programs. Lastly, companies are advised that to avoid rewarding effort rather than results.