CEO’s Letter: Perceptions are Realities

HRO Today

By Elliot H. Clark

In this month’s issue, we present the Baker’s Dozen Customer Satisfaction Ratings of more than two dozen recruitment process outsourcing (RPO) providers. Talent acquisition is a complex blend of operational excellence, technological application, sales panache, and marketing. Yes, employment branding is a major part of the conversation. How current and potential employees view a company is a big part of the decision-making about joining or staying, so perception of the company’s policies are paramount in this dialectic.

Last month, we profiled the Baker’s Dozen Customer Satisfaction Ratings of the recognition and rewards industry. I want to discuss how rewards policies are related to attraction and retention, and how monumentally, epically, and inexplicably short-sighted it has been for so many companies to foolishly, stupidly, and callously cut the budget out from under their rewards programs during the global pandemic. And if you did, yes I am talking to you!

The pandemic and the economic pandemonium that has followed have forced many companies to make gritty and tough decisions to survive. Many have had layoffs, furloughs (the new term for “laid-off,” but you get benefits), and compensation cuts. None of these are emotionally easy, and I acknowledge that many companies had to do what they had to do. I would like to put aside the layoffs and the furloughs for a moment and focus on compensation cuts. The issue I am raising is that for most large companies, as a budget line item, rewards are often less than one percent of their compensation budget and they are viewed as a “leadership and development” expense. But in my opinion, they are not an L&D cost. Let us re-categorize rewards based on how employees experience them: they are variable performance-based compensation. If you say it that way, it changes the feeling doesn’t it?

Overall, companies have a few levers to drive employee behavior or create perception, and rewards are recognition programs are among the more effective. That is a reality understood by most HR leaders. However, employees see the rewards part simply as a way to get something extra for doing something that needs to be worked toward and earned. If an employee works hard to achieve a goal and earn a reward or incentive and the program is canceled, that incentive will be less effective in the future. That employee will also be disappointed with their organization and feel that their compensation opportunity has been reduced. This may influence their commitment and overall retention. We need to start viewing rewards and recognition as part of the compensation plan or, as I state above, as incentive-based variable compensation rather than a L&D expense.

We have all had many hard choices this year and reduction in expenses were necessary. My point is that if the employees view something as a change in compensation opportunity, employers also need to see it as such. Moreover, most companies spend far less on rewards than they do on other forms of compensation and, perhaps, many can preserve that program as a way to engage, motivate, and reward the employees they did not layoff.

Posted September 17, 2020 in Uncategorized

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