The world’s best-performing companies pay their staff 5% less than the average wage, as they are more effective maximising their reward investment.
According to Fortune’s Most Admired Companies 2008 from global management consultancy Hay Group, the firms included in the list are more effective at managing reward strategies and are better at retaining staff. This means they have less need to recruit expensive outside talent.
The survey of 358 companies also showed that the most admired companies are twice as effective than poor or average companies at rewarding top performers. Almost half of top performing companies (45%) claim their reward programme allows them to attract the talent they need, compared with the average of 25%.
Colin Evans, associate director of reward consulting at Hay Group, said: “Companies who make the most admired companies list haven’t just stumbled on the formula for making employee reward programmes work more effectively. A key differentiator between higher and lesser-performing companies is the implementation of successful employee reward strategies.”
Within the most admired companies listed, 74% of employees understand and appreciate that rewards consist of both tangible components such as salary, bonus health cover and pension, and intangible components which include company culture and career development, compared with 61% on average.