It was interesting to see the research from Watson Wyatt, highlighting that over 70% of European firms were looking to reduce budgeted pay increases in response to the current economic climate (‘Costcutting European firms face risks’, Recruiter.co.uk, 3 July 2009).

It is still important that organisations do continue to reward good performance, but it is clear that reward strategies do need to change and
correlate more closely to business performance.

With today’s greater economic pressures, many organisations are now under increased scrutiny when it comes to rewarding their workforce. Rather than viewing this as a threat, organisations should treat this as an opportunity to develop more effective, and transparent, rewardstrategies across the business.

Central to this is for organisations to demonstrate greater linkage between performance and rewards. In large organisations, in particular, there has traditionally been a lack of integration between performance management and reward processes.

By aligning the two and showing greater transparency, organisations can develop remuneration policies that are consistent with risk management. This can help organisations to foster a high-performing culture across their entire business, as workers can see a demonstrable reward for their performance irrespective of what level they are at.

There is evidence that those organisations that adopt such an approach can create much more earning than those that simply reward top talent — a compelling argument, no matter what the economic climate.

• Richard Doherty, senior vice-president, solutions consulting, Jobpartners