Duncan Brown: Engagement through reward: impossible or essential?

A great aspect of my job is the variety of organisations I work with.

In the last couple of weeks, I have been talking about the links between performance, reward and values with the NHS Pay Review Body; moves towards more market-driven reward with the Universities and Colleges Employers’ Association (UCEA); and the links between reward and engagement at an Aon Hewitt seminar.

Whatever the sector, in this climate of continuing austerity but labour market recovery in some specialisms, the key issue for most UK employers appears to be this: how to utilise reward spend most efficiently to generate improved employee engagement and performance, at a time when many employees are feeling the proverbial overworked and underpaid, as real earnings decline.

Nita Clarke from the Engaging for Success movement told the UCEA leaders that improvements in employee engagement could potentially generate £18 billion additional productivity for the battered UK economy, so it is no wonder the prime minister is interested. There was also much discussion of the chancellor’s aggressive commitment to remove pay increments across government and the effects on staff engagement.

The press is full of examples of the difficulties of linking these two factors, ranging from the Communications Workers Union’s rejection of Royal Mail’s 8.6% three-year pay offer to the furore over the significant increase in MPs’ pay. Sir Ian Kennedy, head of the Independent Parliamentary Standards Authority, seems unduly optimistic in hoping for a once-and-for-all settlement to parliamentary pay.

The Whitechapel Gallery near my office has an exhibition entitled The Spirit of Utopia. All this may suggest that engaging employees through pay and reward is a difficult, contentious, near-impossible process. But we definitely can use reward more effectively to boost engagement and recovery.

A major new study from Britain Thinks, (Ex)Aspiration Nation published in July 2013, about the attitudes and aspirations of today’s teenagers, finds a generation surprisingly unscarred and uncynical in the face of economic uncertainty, high youth unemployment and mounting student debt. The survey suggests a move back from the individualistic, money and celeb-obsessed Generation Y towards a more self-motivated, pragmatic focus on the need to build employability (72% claim “to know what I need to do to get the job I want”), combined with a more idealistic streak to “have a job you love” (70%), even if the financial rewards are lower.

Economic austerity will end at some point and more employers need to be thinking ahead about how to offer more jobs to this generation, with reward packages that can meet their needs and expectations. As one sixth former told the researchers: “You just have to have optimism.”

Follow Duncan on Twitter:@duncanbhr