16 / 4 / 2014 Midnight
Once the principles and objectives for your reward strategy have been identified, it is useful to define the standards against which your current rewards should be measured. An example of how one UK company defined their standards is illustrated here. The next step is to establish how ‘far’ your current reward offering is from these goals. This will help you identify how much change you are likely to want to introduce and where improvements can be implemented. Two useful tools to approaching this are SWOT analysis and Gap analysis.
SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a tool that many people are familiar with and it can easily be applied to each aspect of pay and rewards to help employers arrive at an overall summary of the current situation, and if weaknesses and threats are significant, pointing to required changes. We have provided an example SWOT analysis from a large UK utility company, used by a representative reward strategy team, which they set up to highlight key issues with their current rewards package.
Another popular tool is gap analysis. Stakeholders are individually invited to mark the current and desired positioning on some key goals of reward such as those illustrated – market positioning, emphasis on pay and benefits, levels of consistency. Scores can then be summed and compared to highlight the areas where the most change is indicated, which have the largest gaps, as well as the consistency of stakeholder views.
In one large employer, illustrated here, rewards were generally not seen as supportive of the strategic direction, indicating changes required, with a particular lack of attention on non-financial rewards, and the lack of open and effective rewards communications. Changes in these areas were then developed in the next stage.
Once you have concluded your analysis you should have all the information you need to develop your business case.