Eight ways to reimagine reward for the new world

The impact of COVID-19 on organisations and their people has been unprecedented and has caused many organisations to rethink and evolve their workforce, workplace, and operating model. More than ever, organisations are being challenged to meet the talent demands to support the return to sustainable growth, are under pressure to effectively manage reward and benefits costs, and maximise the return on the overall investment in human capital. In this new world where people are motivated to work for companies who are purpose-led, yet facing a future that is less defined, organisations still need to ensure that their reward and performance framework supports this and remains aligned to strategy. It is therefore critical for organisations to take a fresh look at their total reward and performance strategy to ensure it aligns with any new and evolving workforce strategies. It’s time to reimagine reward. 

But what does reimagining reward actually look like? Here are some of our thoughts, from the conversations and work we have been doing recently. 

1. Your people’s well-being has never been more important: The pandemic has not only caused health issues and suffering for many who have contracted the illness, but many people have also been affected by stress and anxiety due to financial difficulties, job uncertainty, loneliness and isolation, as a consequence of the pandemic. Providing a robust, holistic, flexible suite of tools that align with the unique challenges of each organisation’s workforce can help your people better cope and manage their personal lives, and “bring” their best selves to work to contribute to the business, both during and after the pandemic. However, well-being is not just a programme: creating a culture and network that supports well-being, and injecting well-being behaviours into ways of working is just as important for success. Well-being will be a top people priority for employers for the foreseeable future.
2. Better data about workforce preferences will lead to better decisions on cost and value: Applying human-centered and data-backed approaches to decision making will help to create a more valued and cost efficient reward programme. To access this insight, ‘real-time’ reward and performance data must become future focused and predictive rather than retrospective and reactive. This will require a quantum shift in what data you get and how it is used. Understanding this ‘new’ data by including your people and what they value into the process will help make better business decisions, reduce cost and increase engagement. Organisations who are 'first movers' in using data in this way will have a competitive advantage in the recruitment and retention of talent and will be differentiated as an employer.
3. Don't be afraid to be disrupted, courageous and bold: The basics around job design, architecture, pay structures, incentives, benchmarking, and benefits, amongst other things, are all still needing to catch up to this new agile and volatile business and working environment. Your people have already been disrupted. It’s time to consider what needs to change with your reward and performance strategy and framework - think ‘outside in’, not ‘inside out’. 
4. Get serious about fairness and equity: It is now time to be serious in addressing fairness. But fairness is subjective to each individual. Committing to fairness as an overarching principle is common within organisations, but in reality almost impossible to do at an individual level. A commitment to ‘fairness of process’ instead, is much more achievable. As a start to address real fairness, reward and performance decisions must always be made consistently, and part of the wealth created for shareholders should be redistributed to executives and employees in a new way. Without real fairness, you cannot rebuild trust in the total reward framework with any key stakeholder. 
5. Develop and reward new skills for the new world: Employees’ abilities to learn and apply new skills, especially digital skills, in many cases will determine their future success in the workforce. Upskilling is a critical component of a reward offering and will be a differentiator for any organisation that gets this right. PwC’s recent Hopes and Fears survey found 77% of people would learn new skills to make them more employable in the future. And PwC’s US recruitment survey found that over a third (37%) of candidates would take a pay cut if they had a chance to learn a new skill. The opportunity for upskilling is a critical component of a total reward offering, and organisations then have a responsibility to ensure that they value and reward when people are upskilled. 
6. Define ‘good’ and ‘great’ performance and hold people to account: Should you be now measuring D&I and sustainability in addition to financial metrics? What’s more important, effort or outcome? Which is more important, the ‘what’ or the ‘how’? What’s the right balance in your ‘risk-reward’ profile? All ‘old’ questions, but these should all be well and clearly defined. Providing clarity to people will help drive discretionary effort, but unsurprisingly, these definitions need to be reviewed and updated regularly, particularly in the new world of work. Clearly defining ‘good’ and ‘great’ performance for each individual will not only help them take greater ownership of their contribution and career, but will also mean being able to hold them to account, recognise outperformance and conversely have tough conversations when needed.
7. Be prepared now for more regulation in the future and engage, engage, engage: It’s not over, just delayed. Governments and regulators have stepped in to address issues that shareholders, management, boards and consultants haven’t. It’s too late to stop the momentum, but dealing with more regulation, particularly around executive pay, will be the norm. Be proactive by engaging with all stakeholders about their view of your organisation and how you reward people. Greater, deeper and more transparent engagement is the key, especially with your investors and shareholders. Own the narrative.
8. The internal reward function must evolve to be unrecognisable: Just like every other part of the business, reward functions need to evolve with new skills, less silos, better technology and to deliver on higher expectations. We’ve seen some great examples of organisations overhauling their reward function, to offer a compelling and successful programme, which supports a thoughtful and purposeful employee experience. 

We will be taking a more in-depth look at some of the eight points above, in future blogs over the coming months, so do leave your comments, thoughts, questions and own experiences. 

Christine Randazzo, PwC US & Andrew Curcio, PwC Australia