The growing business handbook : inspiration and advice ... - Sparkler

105
Rewarding good
performance and
lowering
corporate risk
4.1
In rewarding performance, risk is too often ignored. Time to rethink, says Will
Cookson at Mazars
Introduction
In a period of financial fragility the perception of many employees is that they are
working longer and harder and yet are financially worse off. Pay freezes and
reduced discretionary compensation, coupled with a 50 per cent top rate of tax and
higher National Insurance contributions mean some employees are worse off than
they were a year ago. Add to that the increase in other personal taxes and a decrease
in tax relief on pension contributions and the picture is far from rosy.
This is, however, an ideal opportunity for employers to refocus employees on the
link between performance and reward. If they perform then one would expect benefits
to the organization.
For any reward structure to be successful stakeholder engagement is critical, but in
many cases there is no such buy-in. How many employees truly appreciated and
valued the performance conditions attached to their rewards during the ‘boom times’
when payments were effectively guaranteed? In any performance-based plan, which
employees understand the relationship between their performance, that of the
company and the quantum of the reward?
Rewarding performance
The attention of both the media and shareholders is now firmly fixed on performancerelated
reward. This started with bonus payments by banks, but is now filtering into
all areas of business, with companies spending more and more time on their
performance reward strategies.