Having recently passed the Gregorian New Year and before we start the Chinese New Year of the Horse is the perfect time to shape the year ahead with the benefit of 2013 hindsight. This also coincides with a recent mentoring discussion which touched upon total reward and draws me back to the perennial question of the relative importance of culture v strategy. The infamous Peter Drucker has become immortalised by the ‘culture eats strategy for breakfast’ quote made famous by the then President of Ford, Mark Fields back in 2006. However as HR and reward professionals can this question help us in shape the sort of workplaces we want to be associated with?

So before I ask you a question, some points I would like to consider …..Continue reading

Check out Sylvia’s slides from the Employee Benefits Live 2013 conference on “How to structure the remuneration package “back to basics”- measuring and paying for performance”on the following link

 

DO Make sure you put a structure in place, even if it’s a relatively simple one to begin with.

DO Identify the things that are really important to your staff – including non-financial benefits – and incorporate them into your strategy.

DO Invest in making your organisation an interesting and fulfilling place to work. It’ll help you attract talent, and can help keep overall pay costs down.

DO Keep it straightforward. Staff prefer clear pay packages to schemes that are overly complex or ambiguous, or that defer benefits way into the future.

DO Map out the pros and cons of potentially risky strategies, e.g. performance pay, before making wholesale changes.

DO Take advantage of free resources, like this fact sheet from the CIPD or expert blogs like this one

DON’T Make a scheme that’s so hard to understand, your line managers will struggle to explain it. They are key to making your reward structure a success.

DON’T Follow the herd. Just because your competitors have a complicated reward structure doesn’t mean you have to follow suit.

DON’T Assume it’s just about pay. As this global survey of executives shows, participants would consider a pay cut of up to 35% in order to get their ideal job.

According to Charles Cotton, Reward Adviser to the CIPD, most organisations still adopt an approach to reward that is “knee-jerk, short-term, reactive rather than actually going out there and saying … what as an organisation do we need or want to be successful?”.

So how can you establish reward practices that will work for your organisation both now and in the future?

Whether you’re updating an existing reward structure or putting one in place for the first time, sustainability is the key to success. In practice, that means having a structure that will go the distance: one that won’t put you in the position of having to cut salaries and benefits later on or leave you open to equal pay challenges further down the line

Sustainability also involves making sure your reward structure is manageable. Resist the temptation to over-complicate things. A structure that is hard to understand will be difficult to implement – and therefore less likely to work. Far better to start with a simple structure that you can adapt over time.

Consider as well how staff will perceive your proposed structure. Is it fair – and will it come across that way too? It’s not just a matter of paying more than your competitors. Surveys show that what matters most to staff is comparability of pay levels within the organisation they work for.

Last, but not least, a sustainable reward structure should be relevant to your organisation. Where pay and benefits are concerned, it’s definitely not a case of ‘one size fits all’. An ideal scheme is one that rewards and motivates your existing staff and attracts the kind of talent your organisation needs in order to secure its future.

Steve Ball, Head of HR for URENCO UK, speaks to Sylvia Doyle

What were you setting out to achieve?

Our parent business, URENCO UK, has a long and well-established culture. We were tasked with setting up URENCO ChemPlants. This required us to develop and implement a reward strategy and practices, together with strong people management practices, to deliver the new business model.

How did you go about it?

Engaging with the senior management team and selecting the right reward consultancy were our first priorities. We selected Reward First People Consulting to help deliver our goals. Developing a performance-focused culture at both the team and individual level was critical to our success. This demanded flexibility combined with strong levels of personal accountability. Also, because we operate within a very tight employment market, developing market-driven reward practices was essential. To ensure transparency and to promote personal accountability and performance we developed a reward structure and practices that reflected these attributes. And we implemented it last year with the full endorsement of the leadership team.

What were your key reward challenges?

There was the obvious challenge of developing a greenfield business alongside an existing, long-established business. However establishing reward practices capable of attracting as well as retaining high-calibre staff was also high on the agenda given the competitive market we operate in.

How did you overcome these reward challenges?

Working on a ‘clean sheet’ basis provided the opportunity to establish reward practices that aligned with our new culture and operating model. On a practical level our new pay structure focuses on developing career paths so staff can clearly understand what is required of them at each level. This also helps reinforce expectations about personal accountability. The use of pay zones is also helping us achieve a strong performance management culture that recognises the contribution best performers make to the business.

According to reward consultant Vicky Wright*, sound reward management isn’t just about market pay. It’s about a total employment offer that “attracts and retains the right people and rewards them for achieving a sustainable high-performance organisation”.

There’s an understandable tendency to talk about ‘talent’ in terms of a select group of MBA superstars. But in fact the talent in your organisation could be a group of people – the ‘engine room’ of your organisation – who you nurture and motivate via your reward structure.

By identifying a small number of individuals as ‘talent’ and rewarding them accordingly, you are likely to achieve a highly-engaged minority. However you also run the risk of creating a disengaged majority.

But if you take a wider view, you can develop a talent strategy that will meet the needs of your business into the future. To be sustainable every business needs a talent pipeline – a supply of people you have nurtured and developed, who will be in place to meet demand when you need to replace key staff.

At Reward First, we believe that generating talent internally is a vital part of a sustainable business strategy. And reward practices have an important part to play here. As recent banking scandals have shown, rewarding results and only results may work in the short-term, but if it undermines the values of your business, it will do damage over the longer term.

You can use reward to reinforce behaviour as well as results. And you can develop a talent strategy that takes account of your whole organisation rather than being a fast track for an elite few. That way you will develop a reward pipeline that stands your organisation in good stead now and into the future.

* CIPD members can access Vicky Wright’s piece here

 

Balance short- and longer-term thinking

If your strategy is purely reactive i.e. matching or exceeding the pay, incentives and benefits of your competitors, ask yourself what effect will this have on your ability to achieve your business goals over the longer term.

Make your offer distinctive

Create a reward offer that is right for your organisation (rather than being based on what others are doing). Having a distinctive offer will help your organisation to stand out from the crowd when it comes to recruiting and keeping talent.

Reinforce your organisational culture

Use your reward practices to promote, rather than undermine, the behaviour you expect from your talent. While rewarding results may be successful in the short term, if it also encourages poor behaviour there will be a kickback in the longer term from other members of staff.

Pay attention to what employees say the want

Is there a disconnect between what you believe will attract critical-skill employees and what employees themselves say they want? Evidence suggests this is a common problem. For example, organisations underestimate the importance of job security in attracting top talent**.

** Leading Through Uncertain Times:The 2011/2012 Talent Management and Rewards Study, North America

Let’s assume that your organisation has completed a training needs analysis, drawn up a talent development strategy, and agreed a budget. Now you are looking to identify training providers and suitable programmes.

But before you put any programmes in place, can I ask you just a few questions about responsibility? Namely, responsibility for funding for development programmes, responsibility for progressing individual careers and responsibility for maximising learning and skills through attending development programmes.

Employers continue to identify how they want staff to develop, fund individuals’ development, provide paid time off and identify career progression opportunities for the staff they cherish and nurture – all whilst keeping their fingers crossed that the lure of a development programme and future career progression might just stop their talented employee from seeking pastures new.

So if you asked each member of staff in your organisation where the ultimate responsibility for their development and career progression lies, what responses would you get?

I once asked this question to a roomful of 120 professional, highly skilled staff in a corporate headquarters. The choices I gave them were: 100% individual responsibility; 50/50 shared responsibility; or 100% the responsibility of the employer. The majority felt it was a 50/50 responsibility, but what stunned me was that a significant number said it was entirely the responsibility of their manager and employer.

Well paid and highly skilled guys and gals in their 30’s and 40’s have the distinct impression that their career development is in fact driven and managed by their employer.

And if this is the case, what impact will this have on your:

  • return on investment – i.e. will staff who do not feel personally responsible, value the training you provide as much as if they were paying for it themselves?
  • employee engagement i.e. might employee morale be adversely impacted if you ever removed or reduced spending in an area that staff feel you, the employer, are responsible for
  • ability to develop greater personal accountability i.e. will your  paternalistic approach to career development send mixed signals about the importance of demonstrating personal responsibility?
  • succession planning i.e. will you actually develop the leaders you need if, along the way, you are not obliging these future leaders to continually demonstrate personal responsibility.

And while you reflect on how many of your staff really do take personal responsibility for their own careers, let me throw in one final thought……… is it possible that you, along with many other organisations have a potential conflict between the younger generations coming through who seem to be demonstrating far more personal responsibility for their career development (both paying for and attending development activities outside of work) and the older generations in work who have a greater tendency to sit back and wait to be developed?

If you are one of those organisations seeing these generational differences in attitude towards responsibility for personal development, how do you reflect this in your current L&D strategy?

This blog was written by Helen Jamieson Director of Jaluch Ltd, a well known and widely respected HR consultancy operating across the UK