Debi’s inside track: why talk of responsible reward is on the rise

The concept of ‘responsible reward’ is starting to crop up more often across pay, pensions and employee benefits.

We’ve seen the idea of responsible reward for a few years at the executive remuneration level because of the increased emphasis on companies having a ‘purpose’ beyond profit coming from global institutional investors.. This has led to pressure to link the compensation of CEOs and other board-level directors to how sustainable that business is in terms of environmental, social and governance (ESG) goals, as well as what their purpose is beyond quarterly and annual profit and share price targets.

Fair pay creates sustainable cultures

But for responsible reward to fully work, it needs to extend down the organisation. Fair pay and paying people enough to live on is the responsible thing to do. It is part of creating a sustainable culture where people want to stay engaged and productive.

Far too many people in poverty in this country are in full time work – and that should disgust us all. Biases down to gender, race, sexual orientation or disability are also rife within pay. All of these irresponsible reward behaviours need to be called out loudly.

Pensions and environmental goals

As we’ve seen the importance of purpose in our world rise more generally, along with greater awareness of care for environment and society, I’ve heard more employers talking about reviewing their workplace pension investments to ensure that they align with their sustainable environmental goals.

This is a tricky area though. We cannot simply switch off oil, for example. Too much of the world still runs on it. But by applying pressure and getting investments and companies to shift over time, we can make sustainable changes. The last thing we want is heavily-regulated companies to suddenly fail and leave the market open for all comers – good and bad. We’d be worse off, not better.

Support staff through wellbeing

A big part of responsible reward is looking after employee wellbeing – in its broadest sense. A responsible employer puts the support in place so people can do their best work, starting with leaders and managers who truly have good people skills and then supported by wellbeing initiatives. But it doesn’t end there. As reward and benefits practitioners, there are no doubt other areas where we can be rethinking reward in a more responsible, sustainable way.

Rise of CSR in motivation schemes

I’m aware of some employers that have completely reviewed their employee incentive and motivation programmes. Gone are the days of luxury travel, while rewards with more corporate social responsibility in mind are on the rise.

As our awareness grows of the benefits of responsible reward we will see a gradual shift. For now, let’s share good ideas and workable practices to help each other on this journey.

The author is Debi O’Donovan, co-director at REBA.