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August 2009

Future Reward: The Future of Reward Programs

CGB In case you haven't seen it, I thought I would share some highlights of the 2009 Hay Group and WorldatWork "Reward Next Practices" report, which came to my attention yesterday. The report is a look at "the future of reward programs" and is the outcome of a survey of 763 organisations in 66 countries, typically multi-national organisations of $1 billion or more in revenues, supplemented by interviews with a further 30 large multi-national companies. So I guess you could say it gives a pretty good idea of what these companies are thinking and hence of future directions, especially since it specifically included assessment of what is important now compared to what will be important in the future.

So what does it tell you that you need to know? Well, it begins with the totally unsurprising statement that "Reward executives are first focusing on better aligning labour costs with new economic realities, then preparing for future growth when the economy improves." As if, in the present economic climate companies would be doing anything else. You hardly need a report like this to tell you "The main concern for the next year will be to manage employee expectations and maintain engagement in the face of constrained financial rewards and the threat of job losses."

However, it did get better. Some key findings were:

  • A more holistic view, placing increased emphasis on strategic alignment of reward programs and aligning them internally. (I wonder whether that means the big banks will stop seeing their investment banking arms as separate entities and rewarding those people on a scale that can only antagonise the rest of their people?)
  • Better aligning pay and performance, including:
    • Ensuring the right performance metrics are in place 
    • Achieving the appropriate balance between short-term and long-term measures 
    • A balance between the right types of measures 
    • Aligning employee behaviours with long-term strategic goals and financial performance measures. There is likely to be a substantial shift towards long-term measures.  
  • Viewing reward as an investment not a cost
  • Implementing strategies and programs that can be consistently applied across all areas of the organisation. This, however, does not mean a "One size fits all approach." (I suppose this answers my earlier question about the banks.)
  • Greater attention to employee engagement

Even though the consensus is that "reward programs will likely see an evolution rather than a revolution over the next two to three years," there are two particularly encouraging aspects to this report.

  1. The tacit admission that reward programs have not been well managed in the past.
  2. These issues and proposed solutions all reflect things I have been saying for the past 6 years and thus confirm that Zealise does offer a realistic, effective, solution for those who are willing to look up from the pure "aligning of costs."

Nevertheless, I would still be interested to know what your reaction is to these findings. Please add your comments and thoughts.


What's the Customer Got To Do With It?

Yesterday I rediscovered the joys of travelling by train in the UK and spent over 5 hours travelling for a lunchtime meeting only 32 miles away!

First I arrived at my local park-and-ride station to learn that the scheduled train had been cancelled due to signal failure. I explained that I needed to be at my destination by 12 noon and asked what my options were. I was advised to train to another nearby town and take the train from there, which would get me to my ultimate destination 15 minutes late. Only problem was, after I had purchased my ticket, I learned that the incoming train was delayed and I would not make it to that other station in time to get the train I needed, meaning that earliest I would arrive would be at 13:25.

So, after getting a refund, I opted to avoid 2 sides of the triangle and drove to another park-and-ride station which, in the worst case scenario, would allow me to catch the train I would otherwise have missed. While this did not quite go to plan, I eventually made my meeting around 12:30.

The return journey started much more auspiciously. The train actually departed on time and proceeded on schedule to the penultimate station before the one where my car was parked. Then, I spotted some irate travellers having an argument with train manager and learned that the train was now going to take an alternative route to the station 5 beyond where my car was (and ironically the one where my journey would have started if the original alternative option had worked out.) 

I won't bore you with the details of events before I was eventually bussed all the way back some 2 hours later, having completely missed a scheduled afternoon meeting. Suffice to say that the situation arose because there was a train fire at the 3rd station up. Of course this made everything understandable, but there were several examples of unacceptable customer service for which there can be little or no justification. You judge whether I am being reasonable.

  1. The fire at the station ahead was known about before we left the previous station. One elderly gentleman vociferously complaining to the train manager was irate because he had specifically been told that it would not affect his journey. The train manager simply told him it was no good getting angry with him, because no-one had told him about it. So you effectively have a poor communication system where some are informed and others not, with people who should be in the know in the latter category.
  2. The train manager, now aware of the situation, was dealing with angry passengers, but had still not made any public announcement amount the problem.
  3. The decision to press on using the alternate route was made without any consideration of passenger needs. In my case, if I had been told I could have got off at the previous station and simply taken a bus or taxi to my car. This obviously links in with the first point, but from my perspective, I fail to understand why the train didn't just return to the last station, before pressing on - at least giving passengers the option.
  4. When we arrived at the destination, we were left entirely to our own devices as to how to proceed. There was no central point for passengers to meet, no effort to find out the best options for each of us and no announcements over the public address about the problem. From Information I was given advice to take specific trains which were then subsequently cancelled or rerouted and then had to make my way back and queue again to get fresh advice.
  5. We were eventually advised that there was a bus for us to take us back, but when we got to the bus the bus-driver had not yet been instructed as to what he was doing or where he was to go.

Perhaps these issues arise because of the complexity of running train services and the limitations of where trains can actually go. Maybe ensuring a train gets to where it needs to go is more important and ultimately less disruptive. However, I cannot help thinking this lack of customer service is the result of having a de-facto monopoly over a route and thus little or no idea of the importance of customers.

For me it runs deeper than that, because it is completely indicative of a lack of employee engagement. If people are engaged in what they are doing the customer experience will inevitably and naturally be better. So rather than just seeing this as me giving vent about my bad customer experience, I hope you will see it a prompt to re-examine your service and ask yourself what impression you are giving your customers and if it might even be that they really don't matter!