Poor communication of reward is seen as the most common threat to organisational performance associated with pay and reward, according to a survey commissioned by the Chartered Institute of Personnel and Development (CIPD).
Despite the media and regulatory spotlight on the dangers posed by bonuses around encouraging poor behaviour and performance, the CIPD survey of almost 300 HR professionals found bigger concerns around overall pay budgets failing to deliver improved performance.
Bonuses are low down in the pecking order of risks, with the most likely danger currently facing organisations in pay terms is not that their bonus schemes are encouraging risky behaviour.
The survey also identified the impact on employee engagement of pay freezes, cuts in employee benefits and restructuring of reward packages as another key area of concern.
Its findings will feed into a report, Managing Reward Risks: An Integrated Approach, to be published in September, which will help HR professionals to identify and manage the various risks around reward.
Worryingly, only 17% of respondents believe their organisation is prepared to meet the reward risks identified in the survey.
According to the research, the most common areas of concern are:
1 – Poor communication of reward leading to poor organisational performance
2 – Inability to adapt reward policies and practices to the changing business environment
3 – Reward failing to engage employees
4 – Reward failing to attract key talent
5 – Ineffective reward strategy causing poor employee relations
6 – Poor employee understanding of reward
7 – Line management reward capability
8 – Employees not perceiving reward as fair
9 – That bonuses and incentives do not motivate
10 – How people are rewarded not supporting the business strategy