Employee Rewards - The less you have to spend, the smarter you need to be about the way you spend it.

There are some facts you can’t argue with: employee reward is an organisation's biggest expense (typically 60-70% of total costs); and companies report huge demand for talent. And yet, here’s an irony: not only are pay and reward budgets at their lowest for some years, the governance of them is often unclear, causing unnecessary over and under-spending. Both have serious employee relations and financial implications.

Thankfully, these pressures are forcing the reward function to respond – in the way it’s organised to service the business, and in the sophistication of its processes, to ensure the business maximises value derived from its spend on reward.

Fortunately too, since the economic crisis, professionalism of the reward and benefits function has had to grow. CEOs need to know their organisations will be fit for the future; they need to know what the right reward model looks like to attract and retain the best talent. In discussions with the board, it’s reward that has to be sat on, or near the top table.

The greatest direct ROI from better reward management will come from tighter control over reward spend. This will positively impact employee perceptions of their rewards, their satisfaction with their jobs and their commitment to the company. Well-managed reward functions should realise short-term and lasting efficiencies (even at lesser cost).