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.
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.