Fair Reward – How Can You Get the Most from Your Reward Spend?

During recent years the priorities on reward and diversity issues have been shifting. Media attention has focussed on pay equality between men and women as highlighted by the gender pay gap. With an increasing number of employment law changes some employers have concentrated on meeting compliance requirements such as age, ethnicity, disability etc. However this situation is changing as more employers recognise the business benefits of making reward fair for all employees.

What exactly do we mean by fair reward? According to CIPD “Fair reward means allocating reward according to fair and objective principles. It means establishing fair and objective processes for distributing reward, checking that reward outcomes are fair by carrying out regular equal pay reviews and monitoring pay and benefit decisions. It also means ensuring transparency and good communication around reward so that employees understand why and how reward is being allocated the way it is and will perceive your approach to reward as being fair.”

Of course, fair reward is also about ensuring your pay budget is effectively used to reward attributes that your organisation vales such as skills, performance and competencies. Where ‘length of service' may have been rewarded in the past, consider more holistic reward approaches to differentiate yourself which will also help you attract and retain key people. See Just Rewards on Non-financial reward, the Question of the Month at thebottom of this newsletter and the Just Rewards Blog for more help. Take a look at the Tips Section below on the Golden Rules to Achieve Fair Reward.

Tips: What are the Golden Rules to Achieve Fair Reward?

• Go back to first principles – Fair reward is a simple concept that involves objective processes to ensure that reward outcomes are fair and equitable. Take stock of current principles ensuring that processes and practices such as pay determination and job evaluation are properly designed and have been equality proofed. Ensure that stakeholders involved in making reward decisions e.g. Line Managersare both competent and fully equippedto achieve fair outcomes.

• Monitor and evaluate – Use analytical job evaluation and other measurable processes where possible. However, regardless of the pay systems in place carry out equal pay reviews (EPR) that take account of all equality factors from ethnicity; age; gender etc. The EPR needs to account for scenarios such as additional responsibility payments; bonus allocation; market based supplements etc. to ensure that differences are based on objectively justifiable business reasons.

• Communicate and avoid the ‘say-do' gap – Ensure that your organisation's culture; values, strategies and practices are aligned to your reward goals is central to fair reward outcomes. Senior level commitment is essential and needs to be widely communicated to all employees in a consistent way. Make sure that the basics are clear, explaining how reward packages are determined and the monitoring arrangements in place to achieve fairness. Keep line managers in the loop. These measures will help employees to perceive your approach to reward as fair.

• Be flexible to attract and retain the best – Where your pay levels are equitable, focus on total reward practices such as establishing a recognition culture where employees feel valued for their contribution; developing autonomy in the work environment and, where feasible, flexible working to support employees to balance work and home.

Website of the Month – Opportunity Now

This month we focus on Opportunity Now the UK based membership organisation for employers committed to creating an inclusive workplace for women.

Why look at the site? – Opportunity Now links into this month's theme of Just Rewards but more importantly it runs the UK's most extensive survey on gender equality and diversity in the workplace.

What works well? – The website has some informative research and articles in sections such as Best Practice (look at the 7-point diversity plan); Benchmarking and Resources.

What could be improved? – The News section is disappointing since there is a total of 5 articles even though there are 6 news sections listed.

Question of the Month

The Question of the month for June comes from an HR Manager in the Public Sector asking “As a public sector employer with a prescribed salary structure and limited benefits (final salary pension scheme) we have done the normal things such as childcare vouchers. What else could we do, with limited money, to differentiate ourselves from other employers in our sector?”

A. Setting pay levels aside and building on the work done on childcare vouchers, there is considerable scope to focus on your total reward offering by focussing on 5 key areas, namely:

Establish an enabling environment – There is no mention of work environment, however getting this right will contribute to building a positive reputation. Consider factors such as autonomy where work is sufficiently challenging but not overloading. Ensure people have the right tools to carry out their work and an environment where working relationships can thrive.

Focus on personal growth and development – While cash may be limited; are there opportunities for learning and development beyond employees' current job roles? This does not need to be a promotional move, though lateral moves will also enhance opportunities for future career moves.

Offer work life balance – Sometimes overlooked as a 'given' in this sector. It is a major selling point for people who need or choose to balance their work and personal lives, not just childcare. Support it and communicate widely.

Promote your culture and values – While many private sector employers build ‘culture and values' into the brand, this trend has been slower within the public sector. Consider opportunities to build your ethos and values to differtiate yourself from the competition. Look at the Cabinet Office achievements.

Communicate total reward offer – Communicate the package to ensure people understand what they already have e.g. generous holiday; paid sickness absence; life assurance (linked to pension scheme); training and development etc. Also consider other benefit arrangements such as voluntary benefits; salary sacrifice on green schemes such as Bikes to Work etc.

Developing these factors will help build your reputationand differentiate you from the competition.

If you have a question for the July issue, let us know by clicking here to e-mail or look at the Just Rewards Blog.

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Please note that the advice provided in this newsletter is for guidance only. If you need specific advice relating to your requirements, please call Reward First on + 44 (0) 1367 710 618.