Most Admired Companies: No Silver Bullet for Reward Program Success

How do you make your employee reward program succeed? New research says it comes down to simple implementation, and nothing more.

Philadelphia-based consulting firm Hay Group, out with its annual America’s Most Admired Companies list in partnership with Fortune magazine, finds that successful companies on the list 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,” says Hay Group consultant Mark Royal.

Companies on these lists pay about 5% less than their peers because they are better at grooming people internally and retaining employees, according to Hay Group. It calls this a “ripple effect” across an organization.

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The firm says research on these “admired” companies reveals the following:

  • 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 use 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.

Fortune magazine worked with Hay Group to conduct this year’s survey. Apple has taken the top spot in 2008, after ranking 7th in 2007 and 11th in 2006. Berkshire Hathaway, GE, Google, Toyota, FedEx, Procter & Gamble, Johnson & Johnson, and Goldman Sachs round out the top 10. Other companies in the top 20 include Target, Southwest Airlines, American Express, BMW, Costco Wholesale, Microsoft, UPS, Cisco, 3M, and Nordstrom. Noticeably absent in the top 20 this year: Pepsi and Wal-Mart.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.


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