There are those using the opportunity to work from home as an important benefit offered to candidates. Spotify has championed employee trust by saying they will let employees work from anywhere they do their best ‘thinking and creating’. The music streaming and podcast company said that the re-evaluation of its office space is driven by a desire for ‘increased sustainability, flexibility and wellbeing’. The office space will be a place of collaboration. Facebook, Google and Amazon are also envisioning a ‘hybrid’ of working from home and providing a collaborative experience and attractive amenities for the days employees elect to come in. Whilst these companies’ approaches to pay may differ, the flexibility and ongoing remote working policy will be a huge draw from a wider talent pool, reflecting how this is forming a crucial aspect of some organisation’s employee value proposition (EVP). Some companies have made a cost saving and financially thrived through this difficult global period, whilst recognising that employees are not needed in an office five days a week. This suits particular sectors such as the third sector, which realises the cost savings to be made especially for those with London branches.
4. The search for a magic number
In terms of pay and how it operates in the overall reward strategy, is there no longer a correct rate of pay for a job? Is there a magic number that benchmarking divines for reward specialists? Whilst benchmarking helps companies to assess the bandwidth they may have in terms of budget for each role, the complete reward package should be considered holistically. We feel there’s no ‘one size fits all’ approach to reward. Benchmarking is one important element of the wider research organisations should factor in, to ensure that the pay and benefits being offered to top talent is competitive. Paying consolidated national rates for roles, offering flexibility and the track record of companies in terms of diversity and inclusion may also enable them to cast a wider net in their search for skills. Total Reward Statements are also an important tool for companies to underline the full mix of rewards they offer in times of constrained pay.
There is also the additional challenge of managing differences in pay practices following mergers and acquisitions. Whilst external benchmarking is crucial to satisfying the hurdle of competitive pay, there must also be internal parity of pay. Discrepancies can occur following high growth activity, as companies are bought and retain their ways of operating. Getting in place consistent pay structures and ensuring job roles recognise equivalent work throughout organisations is a very involved process. Fair pay in this context can bolster employee morale as there is a consistent approach throughout the organisation. Therefore, the search for a ‘magic number’ both internally and externally can produce a more stable and fulfilled workplace.
5. A mixed approach to bonuses
Many scrapped bonus payments in 2020 to save cash. It will be interesting to see what companies plan to do in 2021 if revenue is still shaky. That may mean no bonuses for people for two consecutive years – will there be a renewed focus on base pay? 56 per cent of respondents to our UK Reward Management Survey in 2020 had already made their final pay award decisions as we went into the first lockdown. Therefore, the average level of pay reviews was sustained around the two to three per cent. It will be interesting to see if this is consistent with the pay reviews awarded in 2021.
Some employers may be more likely to offer bonuses than consolidated pay increases. This is a bold move as it normally comes down to the cash position of an organisation. Lidl gave all frontline staff a £200 ‘thank you’ bonus and Morrisons have increased their bonus threefold in recognition of the huge efforts by colleagues. The Scottish parliament awarded nurses a £500 bonus as a 'thank you' for their efforts in tackling Covid-19 in November 2020 and Northern Ireland followed suit in January 2021. There is currently a petition running to replicate this for NHS and Social Care workers in England, but the last one in 2020 was rejected. The majority of House Builder organisations did not pay a bonus, operated a pay freeze and made redundancies. However, whilst performance levels are of course down, some are doing some readjusting in relation to financial targets over the past six months. This means they may be able to award bonuses in recognition of hard work during turbulent times, based on affordability and performing better than expected. This ensures employee morale is not overlooked and employers are being seen to treat people as fairly as they can in difficult circumstances.
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From the design of an organisation’s overall reward strategy to the granular detail of job evaluations, let us help you put an effective framework in place to achieve fair pay throughout your organisation. We will assess your approach to pay for 2021 – call us today.