Written by
Changeboard Team

Published
26 Jul 2011

What makes a commercial head of reward?

26 Jul 2011 • by Changeboard Team

Reward it's all about the numbers, right?

What could be more commercial than a function that focuses on numbers and what people get paid? Surely every head of reward is commercially oriented, just by virtue of their proximity to the finance function?

The rigours of the annual business planning cycle, the scrutiny of the Remco and the threat of activist shareholders and trade unions on the prowl for 'fat-cat' pay packages – all of these pressures hone the commercial instincts of the reward specialist, don’t they?

Well, yes, as long as the only measures of success of the reward function are: the accuracy of the salary bill against the budget; the competitiveness of the executive reward packages; the quality of the market evidence under-pinning the reward framework.

These measures favour competence in numeracy, pay process controls, benchmarking and presentation of logical arguments. In which case, why don’t you promote a finance manager from your company into the head of reward role and save yourself the expense of an external search?

Forecasting & measuring impact

These are just the basic skills of the reward function and ones which could be somewhat outsourced to the finance function in any case. What differentiates a truly commercial head of reward is their ability to appreciate and forecast the impact of a wide range of rewards on people’s decisions and behaviours; to design reward solutions that drive the performance and reinforce the values of the company. It's the human factors that should drive reward decisions not just the economic ones.

So when you are searching for your next head of reward or even reviewing the performance of your current one, look for evidence that they understand the personal and organisational behaviours that result from their solutions – both the good and the bad outcomes.

Linking cause and consequence

Commercial candidates understand why they have done something, not just that they have been good at delivery. The HR function does not add value when it just apes so called best practice. It adds value when it applies a knowledge of human behaviour, motivation and psychology to the challenge of how their workforce delivers real value to both it’s customers and shareholders at this time in this market.

So, ask your candidates about the negative impact of variable pay (bonuses etc) in their last company. Ask them how they balanced the temptation to work in silos to achieve divisional financial goals against the ambition to drive collaboration and innovation across the group. Ask them about the impact of executive pay on company brand and employee engagement.

Challenge them on how they have accommodated the non-financial reward needs of Generation Y and how they have educated the board on these new trends and their impact on the company’s traditional reward principles. In fact, why don’t you just cut to the chase and ask them what are the desirable behaviours in their company, how these contribute to company success and how their reward strategies have increased the frequency of these behaviours.

You never know, you might find someone who understands the value of everything as well as the cost.