Incentives must be aligned with HR strategy
David Woods, November 19, 2009
Incentives and bonuses play an 'essential role in levering business performance' - but they have to be aligned to HR strategy, according to HR leaders.
Speaking at the CIPD Annual Conference and Exhibition in Manchester yesterday, Leigh Harrison, executive reward manager at Sainsbury's, said: "Incentives for staff are fundamental tools but complexity will not work. Incentives must be relevant to employees and targets have to be attainable and HR must communicate relentlessly. Then you will see as change starts to happen."
But Vicky Wright, president of the CIPD, added: "One of the problems we have got is that the bonus culture has taken over and there is a mismatch between leaders who have big pay increases when employees get nothing. There has to be an end to high payment for short-term performance.
But Harrison maintained that, despite the furore surrounding excessive bonuses, reward strategies could work if they were backed up by a "robust business strategy with ethics".
And Wright went as far as to argue that, without the bonus structures in place at City banks during the recession, which were flexible enough to be reduced to save costs, more jobs could have been lost in the City due to spending cuts.
But John Beadle, group head of human capital performance at Standard Chartered Bank, added: "Employers must have organisational governance in place to ensure pay is aligned with HR strategy to make sure rules are followed when bonuses are paid out. This will outline guidance on putting risk into incentive payments - this is the challenge for HR professionals."