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Performance and reward management beyond the crisis: back to the future? 35‘Total reward is all about communications’; ‘you simply can’t over‐communicate’;‘communications is key’. IES’s current research on reward effectiveness highlights justhow critical communications really are, with the majority of participants planningand investing in improvements. They need to. In one recent survey fewer than half ofemployees in organisations which had frozen or cut pay agreed with the action,leading to the conclusion that ‘poor communications have eroded the bonds of trustbetween employer and their employees’.Scarcely surprising then that the employers who seem to be leading the way onreward communications in our research, including KPMG and McDonalds, are alsoexemplars and leaders in employee involvement and engagement.From incentives to engagementThe often unspoken philosophy underpinning the spread of performance pay andincentives in the UK in recent decades was a fairly crude one of ‘carrot and stick’motivation: achieve ‘X’ SMART objectives and receive ‘Y’ financial reward. The researchevidence is quite overwhelmingly that, as Professor Simon Burgess puts it, ’employees dorespond to cash incentives’. But the problem is, that as those responsible for the design ofbank traders’ incentives will now be ruefully reflecting, they respond ‘often insophisticated ways that may or may not benefit the organisation’, and in that situation helpedto wreck their employer and threatened the entire financial system in the Westernworld. We need to replace rewards for incentive with rewards for engagement.Employee engagement is nothing new. In 1929 J B Priestley visited the Cadburyfactory in Bourneville and was amazed by the employee benefits, ‘magnificentrecreation grounds, a large concert hall with continuation schools, medical attention … workscouncils, pensions’. ‘Here’, he wrote, ‘is definite and enormous gain’ for employers,owners and employees.But we at IES think that engagement has had a remarkably good recession. Chiefexecutives have genuinely bought the message from all the research evidence, ablysummarised in the government’s McLeod review published in mid 2009, thatemployee engagement has a major influence on corporate performance. IES’s originalreplication of the Sear’s research study in the UK almost a decade ago conclusivelydemonstrated this. Two‐thirds of companies in the downturn following 9/11 felt thattheir actions to cut costs and staff had damaged their subsequent performance inrecovery, and we have seen employers working hard to retain staff and theirmotivation in 2009 (the subject of a current piece of IES research).But all of IES’s research also shows that while rewards and other HR processes canstrongly influence levels of employee engagement, it is not simply financialincentives and rewards that do this. Rather it is the context within which peoplework, where they feel genuinely involved and listened to and cared for, and treated