Case Studies | A review of an existing rewards and motivation system

This review of rewards and motivation took place as one element of a wider change programme. Work had been underway for some months to overhaul activities across a manufacturing and design company. It became apparent that the pay and reward system that was in place did not support the change of culture and working style that was one of the objectives of the programme.

It was decided that although pay and reward was a very sensitive topic, it was definitely an area that needed to be tackled as it was linked to so many aspects of the change programme. Also making changes in this area would send a powerful message about how serious the organisation was about the other changes.

A small team was formed, which included members of the overall change team and representatives from HR and Finance. The team met for three hours each week over the next few months, with some off-line work to develop models etc. Two team members met regularly with union representatives.

Once we started looking at the detail, the true extent of the problem became obvious. We wanted to encourage people to develop a range of skills and be flexible in their working, but the existing system gave extra payments for a small fixed range of specific skills. We wanted new employees to feel that they were valued from day one, but the system gave an incremental bonus based on length of service. We wanted everyone to help find ways to match capacity to seasonally fluctuating demand levels, but the system simply rewarded long working hours.

Taking company vision and values statements and the change programme objectives as starting points, the team considered a wide range of options. A new system was drafted, and reviewed with the site management. A model was created to assess the financial impact, and discussions were held with the overall change team to ensure that the operation of the new system and the timing of its introduction would support the overall change effort.

Under the new system each employee received a proportion of their salary based on their individual competence, and a variable bonus based on individual, team, and company performance. A phase-in approach was devised so that no-one would suffer a short term drop in earnings as a direct result. The new system was based on harmonised terms and conditions and introduced a flexitime approach to reflect fluctuation demand.

Communication about the new system had been regular and open throughout the design process, so when it was formally announced there was practically no adverse reaction - very unusual for changes affecting the pocket! In fact the majority of employees welcomed the change, recognising the new system as fairer and better aligned to company objectives. Some were worried that they would be 'found out' and suffer a drop in earnings over the longer term, but were reassured when they saw that other elements of the overall change programme would support their development.