2| Reward Challenges and Changes Survey Report
It’s no surprise, then, that a rewardstrategy that helps an organizationattract and retain key talent and — mostimportant — motivate them to drivebusiness growth, has enormous power.For the last 12 years, Towers Perrin hassurveyed pay and performance practicesto track how well organizations are adapt-ingtheir reward programs to a dynamicbusiness environment and fast-changingcorporate strategies. Our surveys — eachone more global in reach — provide arolling four-year view of process andprogram design trends and concernsand underscore the increasing difficultycompanies experience in synchronizingtheir reward practices with their strategicand talent priorities.Our research shows that the challengeof getting the reward equation right ismore formidable than ever. A decadeof radical change on the business fronthas spanned the period of the Internetboom, bust and, now, “reboom”; theincreasing globalization of business,capital and labor markets; and cyclesof growth and recession, among otherdevelopments. However, as our findingsclearly illustrate, reward strategies andstructures have not kept pace with thesemarket and business forces. Respondentsreport only modest or superficial changesin the reward and performance manage-ment practices they are putting in placeto support their new business and peoplemanagement models.Broadly, the key findings show:
A preoccupation with tactics versusstrategy, particularly in terms of truealignment with business needs.
Companies are not reaching for thelarge-scale strategies that will make asignificant difference in organizationalperformance. They’re not effectivelysegmenting rewards, truly differenti-ating performance, identifying theirhigh performers and key talent pools,or customizing rewards to meet theirspecific talent and performance goals.Instead, they are focused on tacticsthat are not likely to produce signifi-cant results: incremental changes invariable pay plans and eligibility forincentives, shortened or lengthenedpay communication cycles, changesin the rating scale for performancemanagement, and implementation ofnew technology. This very focus ontactics — “tweaking” programs yearin and year out — may be the chiefobstacle to truly effective and effi-cient program design and delivery.
Executive Summary
The evolution in views on how employees create value,fuel corporate growth and drivecompetitive advantage has had an enormous impact on business success in the last decade.Today,the lion’s share of corporate value — nearly three-quarters by some estimates — comesfrom an organization’s people and their ideas,innovation and performance. Put another way,competitive advantage is increasingly being achieved through investments in people and skillsrather than expenditures of capital for physical assets.About This Survey
The 2007 Towers Perrin reward challenges and changes survey,
Reward Management: Closing a Growing Say/Do Gap,
presents data from 637 HR and compensation executives at midsize andlarge companies in 21 countries in North America, Latin America, Europe and Asia. Fifty-onepercent of respondents come from organizations reporting more than $1 billion in revenues in2005. The survey builds on similar research from 1995, 1999 and 2003 to compare changes inreward and performance management programs over time.
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