The Manager’s Guide to Rewards: What You Need to Know to Get the Best for—and from—Your Employees

Chapter 2. Ensuring an ROI on Your Rewards Programs

YOU MIGHT THINK that it’s silly to ask whether organizations measure the ROI of their compensation programs. Most of us would assume they do. After all, compensation is one of the largest controllable expenditures an employer makes—sometimes up to 70 percent of its total costs. Yet fewer than 20 percent of organizations report using a formal ROI analysis for making compensation decisions.

Throughout this book we discuss reward strategies and actions that managers can take to significantly increase the return on the investment in their people. This chapter begins that process with a perspective on ROI—specifically, how to identify what to measure and how to measure it.

What? Me Measure?

Even though ...