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Businesses are emerging from the pandemic increasingly thinking about how best to organise their approach to reward and whether it truly supports their recruitment and retention objectives.

According to our most recent UK Reward Management Survey, one third of respondent employers expect recruitment and retention difficulties in the next six months. We are increasingly seeing enquiries around pay scales and pay reviews as organisations seek to ensure their remuneration systems are fair and support their business requirements.

Here we outline three important ways you can help ensure your reward system can attract and retain talent in an increasingly buoyant labour market.

Define a consistent approach

Employers and employees alike benefit from an objective pay structure that places fairness and transparency at the heart of its approach. This gives line managers a clearer and more consistent plan of action on which to base their decisions around performance management. By equipping them with a robust and sustainable framework, this increases the likelihood that consistent plans are implemented across the business. Equally, employees can make reference to the basis of remuneration decisions, knowing that they are being made objectively.

This structure also gives businesses certainty as they emerge from unprecedented turbulence. The number of employers paying a premium to attract talent was down from 63 per cent in autumn 2019 to 30 per cent in spring 2021, indicating that the labour market is emerging from a period where employees valued security. Plans to introduce vaccine passports for access into nightclubs and large events in England will not go ahead, but they will still be used by travellers to avoid quarantine when returning from amber list holiday destinations, suggesting Covid passports may not affect recruitment. With eight per cent of NHS staff remaining unvaccinated, the government are considering plans to make jabs mandatory for frontline workers, but given the ethical questions this enforced approach raises, the government are still investigating this route. In contrast, the US has mandated that employers with over 100 workers require them to be vaccinated or have weekly tests.

“With the level of change businesses have had to weather and the uncertainty that persists, having robust systems in place to reward and recognise employees is important to give employees stability and build loyalty within teams.”

Combined with next year’s National Insurance increases, that are set to also increase costs for organisations, businesses are having to navigate the ‘new normal’ and the implications this raises for business costs. These increases could affect the recruitment landscape; there is the question of whether employers will increase pay to help lower paid staff with their contributions, affecting competitive pay and benchmarking for these roles. The pandemic has also seen a surge in benefit recipients which had steadily declined, with employers being urged to target hiring under 25s who have been amongst the hardest hit by the pandemic. With the level of change businesses have had to weather and the uncertainty that persists, having robust systems in place to reward and recognise employees is important to give employees stability and build loyalty within teams.

Large-scale projects

When it comes to defining an approach to reward that is evidence-based and built to last, more employers are finding the budget for bigger projects as we come into the autumn. HR is alive to the fact they need to be actively retaining people and attracting the right skillsets. To keep people, employees want to be able to see the opportunities available to them for career progression and how they can achieve a higher salary, in addition to accessing competitive benefits packages.

The following three areas are where we are seeing employers focus their efforts to drive down employee turnover.

1. Pay structure development

Different pay structures are used by businesses across all industries, which can accommodate the market they operate in and their overall vision. Reward systems may be organised differently depending on the outcomes the employer wants to implement. Commission-driven structures, different groups based on different parts of the business or pay ranges to accommodate progression within roles are all different approaches that employers can take. All pay structures recognise the need to pay people consistently and provide the opportunity to re-focus individuals on the ‘new normal’ post-pandemic.

For employers who spent 2020 dealing with the implications of Covid on business planning and managing the impact this had on employees, many employers are seeing 2021 as the opportunity to plan and set the tone for the future. Competitive pay is consistently talked about in our HR Groups as a priority. There is a careful balance to be struck between affordability and trying to keep people in a competitive pay market.

2. Job evaluation

Job evaluation organises roles across organisations, assessing their relative value to one another. This structure forms the basis of pay structures. The decisions around pay are more transparent with this as the foundation, minimising subjectivity and enabling rational decision making. This in turn can drive employee retention and attract candidates who are looking for a culture of transparency and fair decision making. There are reports of a shift in mindset for employees following the pandemic, with more inclusive pay practices being highly valued.

Job grading is a hot topic in our HR Groups at the moment, with employers keen to review their policy. At the core of this focus is employers’ awareness that fairness is what will help keep people. Employees want to know how pay is determined and want to be safe in the knowledge that objective decisions are being made across the organisation. By assessing each role, this also enables businesses to identify any equal pay risks and supports their ability to benchmark pay to remain competitive in the market and sector. This granular detail is important to support a robust system which is focused on treating individuals with integrity.

3. Benefits strategy review

Employers are increasingly examining what they offer and how they communicate this. The benefits package is a vital tool available to attract and retain employees. Especially in times where employers cannot pay large premiums on base pay, benefits supplement the value that employees derive. This is why employers are increasingly innovating when it comes to the benefits they offer.

“Flexible working was once a key benefit for those wishing to balance their personal commitments with work. In light of hybrid working, there is the question of whether some employees now expect flexible working to be an option, especially if they have maintained productivity levels and proved that working from home does not impact the bottom line.”

In a time of remote working for many, benefits that are not dependent on being in the office, such as free fruit and cycle to work schemes, are increasingly common. Virtual exercise classes, team building activities such as online escape rooms and access to discounts make a difference to employees, offering intrinsic value. Stakeholders perceive value differently. The value to employees of discounts is much greater than the business cost. This also allows companies to differentiate and give employees options to suit their tastes. Equally, Total Reward Statements are an effective way of providing a snapshot of the value offered by employers which cover non-financial incentives too, such as volunteering days or access to apps such as mindfulness apps to promote employee wellbeing.

Flexible working was once a key benefit for those wishing to balance their personal commitments with work. In light of hybrid working, there is the question of whether some employees now expect flexible working to be an option, especially if they have maintained productivity levels and proved that working from home does not impact the bottom line. Any withdrawal of this flexibility needs to be balanced against the erosion of trust placed in the employee. Financial wellbeing is another huge topic when it comes to benefits. The Office for Budget Responsibility has reported that £148bn was saved in the first three quarters of 2020 and HR supporting good personal finances of employees can help to reduce anxiety and drive engagement in the workplace. Benefits can play a key role in employee engagement through employers selecting options that work for the employees and their ability to shape their fulfilment across their personal and professional life, which is increasingly blurred.

Get in touch

When examining whether your reward system is fit for purpose and truly delivers value to your people, it is important to examine this through the lens of fairness. Have you got the processes in place to make evidence-based, consistent and rational decisions? Reward projects need buy-in from across the organisation from learning and development, employees and line managers, and the Board itself, to truly effect change and put in place frameworks that are designed to ensure each individual feels recognised for the role they play in delivering the business’ mission. Call us today to discuss how we can help you place fairness at the heart of your reward strategy.


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