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Friday, March 07, 2008

Employee Reward Programs of The Most Admired Companies

Hay Group, a global management consulting firm, and FORTUNE magazine, recently released the eleventh annual rankings of The World’s Most Admired Companies list and America’s Most Admired Companies list, prepared in collaboration with FORTUNE.

Hay Group also conducts supplemental research each year to identify business practices that distinguish companies on the lists from all others. This year’s analysis focused on how these companies manage their employee reward programs, and found that they do a much better job of leveraging their reward investments than their peers.

Some of the research findings include:

  • 79% regularly provide employees with total reward statements, versus 53% of peer group respondents
  • 82% regularly reinforce the company’s reward philosophy in communications with employees, while only 64% of peer companies do the same
  • 74% state that their employees understand and appreciate that rewards consist of both tangible and intangible components, compared with 61% of their peers
  • 41% say that line managers in their organization create a positive work climate, whereas only 21% of peer companies respond similarly
  • 28% state that line managers utilize financial and non-financial recognition programs, compared with 16% of peer companies
  • 41% believe that their reward program is internally fair, while only 27% of their peers believe the same
  • 48% report that their reward programs support efforts to retain their best talent, versus 28% of their peers
  • 45% say that their reward program allows them to attract the talent they need, compared with 25% of their peers
BOTTOMLINE: Companies that make these lists haven’t stumbled on a silver bullet for making employee reward programs work more effectively. They are simply able to execute more successfully on a number of basic HR best practices, and tend to have a cultural understanding and recognition of the value brought to their organizations,” said Hay Group Insight Senior Consultant Mark Royal. “Implementation (execution) is really the primary differentiator between employee reward programs at companies on America’s Most Admired Companies list and their peers – communication, aligning reward programs with business priorities and operationalizing the pay for performance relationship.”

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