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Reward vs. Compensation

Jane Baalam

July 23, 2024

When did we change the meaning of pay?

So I've said this before but I think it is worth saying it over and over. I will never get over how language defines our messages. If you want your reward strategy to give the right messages, think carefully about how you communicate it.


Here is a great illustration for reward that really emphasises what I mean:


Reward: a thing given in recognition of service, effort, or achievement


Sometimes we call it compensation:


Compensation: something, typically money, awarded to someone in recognition of loss, suffering, or injury


If I’m being picky (let’s be honest here I absolutely am) - I somehow think they may have hit the nail right on the head. I wonder at which point does our employment mindset go from wanting to reward our staff for giving us their services, to wanting to compensate them for the fact they have to turn up every day. More worryingly, how did work get so bad that they have to be compensated for doing it?


If your staff don’t love their work, if they don’t love getting up in the morning to do it, if they don’t love it when they are there – then the engagement has gone. This is where you need to start talking again. Engage with your staff and reward them for the efforts they put in on your behalf. Change the message from compensation to reward.  There’s plenty of evidence out there to suggest it works.  I guess the problem is knowing how to do that.


Communicating your reward strategy in an engaging way has to be a good start! I talk a lot about communication and engaging with staff by talking to them. Pay is not necessarily something that we like to discuss in the UK and some managers are particularly lairy of it preferring to refer staff to HR instead.  Maybe then, when we’re busy communicating to staff about pay and reward, we should also make sure that our managers are comfortable to have these conversations by ensuring they are briefed and supported as they engage with their teams. Easier said than done I know, because there will always be the manager who doesn’t want to, or the times when both parties are speaking English, just not in the same way.  I still think it is essential to try.


I am just reviewing a set of salary policy guidelines for a client. They’re really clear and give guidance on what happens in specific circumstances. I thrilled I don’t have much to add. But I can absolutely say, once they share their policy and allow their managers to use the document to support conversations, not only will these managers have better conversations, but they will also be giving more consistent messages. Hopefully then they will also be moving away from compensation and back to reward.


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