Strategic Human Resource Management

2009

Strategic Reward Management and Integrated HR systems: How critical is the

role of Reward in the implementation of a new HR system?

Introduction

Over the last decade there has been a growing recognition of the importance of businesses having an

effective reward strategy that ties into the overall business strategy.

In order to implement a reward strategy, and deliver policies and solutions that are aligned with

business strategy, it is essential that management information is readily available so that it becomes

easy to demonstrate how effective – or not – specific reward initiatives have been.

The impact of the economic downturn

The role of a Reward function has even more importance during a recession, for example:

Pay policies that target certain teams, such as offering market supplements for groups where

skills such as IT can command a premium, may need to be revised during a recession to

control costs and reflect changes in supply and demand.

Large bonuses that have been common in the finance sector and among senior executives

may also need to be reviewed when cost control is critical. Furthermore, whilst bonus

schemes may once have supported delivery of business growth, they may now have the

potential to negatively impact customer loyalty and organisational reputation.

At pay review time effective salary management is essential to ensuring salary increases are

affordable and justifiable and that the best use is made of the available budget, particularly

in a downturn.

Thus, a reliable source of good quality management information is vital.

HR systems and management information

In tandem with Reward strategies being developed and articulated there has also been a significant

increase in the number of integrated HR and Payroll systems being implemented across

organisations. The battle to get capital sign off for a new HR system is a challenge for many HR

Directors. It is challenging to quantify the cost versus benefit in terms...