ALIGNING REWARDS STRATEGY TO MEET CORPORATE OBJECTIVES October 2013

Content Introduction 1. Context of Reward Strategies The “Steak Holders” in our business Pressure to realign reward strategies The Strategic HRM Model The “Best Fit” and “Best Practice” Approaches Reward Strategy Goals Features of Total Rewards System Critical Success Factors Steps towards Positive Way Forward

Content … 2. Motivation Factors affecting Motivation What really Motivates Rewards of Work & Employee Value Exchange 3. Leveraging HR Thought Leadership Staff Engagement Concluding Thoughts Business Eco-system The “Take Care” Model

1. Context of Reward Strategies

Quote on motivating for creativity “Intrinsic motivation – being motivated by challenge and enjoyment – is essential for creativity. But extrinsic motivation – being motivated by recognition and money – doesn’t hurt.” Teresa M Amabile, US Professor of Psychology

Pressure to realign reward strategies  Globalization  Innovation-driven competition  Shrinking talent pool  Push for greater efficiency and productivity  Change in staff’s profile and diversity  Shifting customer demands/tastes  Information, rights and choice

Strategic HRM Model Business Strategies Internal Environment External Environment Overall HR Strategy Resourcing Strategy HR Development Strategy Reward Strategy Employee Relations Strategy P O L I C I E S, P R O C E D U R E S & P R A C T I C E S

Best Fit and Best Practice Approaches The best fit approach - precedent model known as the “matching model”, calls for developing HRM policies including rewards strategies according to business strategy. Rewards strategies are aligned to the contingencies of strategy and subordinates issues of environment and internal capabilities

Best Fit and Best Practice Approaches… The best practice approach – HR policy precedes corporate strategy and claims that a certain bundle of HR activities, including rewards systems, exist which universally supports companies achieve competitive advantage. Assumes “one size fits all” set of best practices will result into high commitments hence achievement of best results.

How of Best Fitting Practice? Towards Total Rewards System “Best fitting practices” – takes a holistic approach, where: a. Careful recruitment and selection b. Focused training and development c. Enabling interrelated policies d. Challenging work environment e. Meaningful work f. Competitive pay package

Rewards Strategy Goals To Support business goals and corporate objectives Attract, retain high performers Link pay to market and achieve market competitiveness Support career development and career progression Manage pay costs and ensure internal equity

Rewards of Work Affiliation Work Content CareerBenefits Compe- nsation

Employee Value Exchange

Critical Success Factors for Total Reward Strategy  Holistic - must address the entire employment ‘value proposition' of remuneration, benefits and careers  Integrated - disconnected solutions are not the answer; the components must fit together and complement each other  Aligned - plan must be designed to support the organization’s unique business strategy

Critical Success Factors for Total Reward Strategy…  Measurable - intuition, anecdotes and best practices are no longer enough. A total reward strategy should also be based on hard facts and quantitative analysis  Delivered - effective communication and administration of the strategy, as well as ongoing monitoring, is critical to realizing the value of a total reward package.

Steps Towards Positive Way Forward 1. Open the dialogue - Start the conversation in the HR department, reinforcing the idea that everyone is part of the same team with the same goals 2. Open the dialogue with the C-suite and business unit leaders - Discuss workforce segmentation and brainstorm how to get inside the heads of the respective groups to develop a better understanding about what motivates and engages them 3. Reassess your company’s total rewards programs and expenditures - Optimize the effect on your workforce, with particular emphasis on critical workforce segments and be sure to spend your money on those programs that can help generate the highest ROI

2. Motivation

Factors affecting Motivation Working conditions Job Security Pay & benefits Recognition Achievement Supervision Career prospects

Productivity and satisfaction… Satisfied = Productive OR Productive = Satisfied ?

What really motivates? Autonomy ◦ Self-directed Mastery ◦ Urge to get better at stuff Purpose ◦ Meaning to what we do

3. Leveraging HR Thought Leadership

Leveraging HR Thought Leadership in Mainstream Business Need to understand business we are in Grasp of markets and trends Numeracy a must Inspiring, energizing, understanding Transformational vs transactional CEO’s right hand Staff engagement and capacity building…

Staff Engagement Inform; Listen Train; Coach Mentor; Develop Fun; Involve Celebrate; Counsel Share.

Concluding Thoughts

The Business Ecosystem… The Organization Government Suppliers Auditors/ Consultants CompetitionShareholders Staff Customers

The “Take-Care” Cycle Business ShareholdersManagement StaffCustomers

Concluding Quote “ Lots of people want to do something more life enhancing than merely turning up to work and making lots of money. Tapping into the aspirations of the people who work for you makes work less of a transactional part of life” – Mark Withers MD, Mighty Waters (an HR Consultancy firm)

Final Word Reward is not limited to the take home pay but is broader and encompasses the overall value proposition that the employer offers employees. an effective total rewards strategy enables organizations to deliver the right amount of rewards, to the right people, at the right time, for the right reason.

Final, Final Word Employees are no longer looking for a job FOR life, but a job WITH Life. Amen!

Thank You! By: Abdillahi Mutwafy, Managing Consultant, HCSS, Nairobi

Reference Materials A Handbook of Human Resource Management Practice by Michael Armstrong New thoughts – case for pro-social bonuses Rethinking Rewards - rewards/ar/1bonus-employees-really-want-even-if-they-dont-know- it-yet/ rewards/ar/1bonus-employees-really-want-even-if-they-dont-know- it-yet/ Daniel Pink’s Motivation Works Reward Strategy- tools/reward-strategy.aspxhttp:// tools/reward-strategy.aspx Total Reward Strategies- rewards-strategies/ rewards-strategies/ Rethinking Rewards - rewards/ar/1http://hbr.org/1993/11/rethinking- rewards/ar/1