We run regular HR Groups to connect HR professionals and provide them with the opportunity to share and discuss the challenges they face within their industry.
Run twice a year, Paydata’s HR Workshops are dedicated to the following sectors:
Associations and Institutes
Facilities Management & Mechanical and Electrical (FM/M&E)
Property and Construction Consulting (PACCs)
Here we outline six common themes that emerged from our spring workshops and the ways in which employers are tackling the recruitment and retention issues that all organisations are currently experiencing.
1. Pay reviews
High employment and a lack of clarity over what Brexit means in practice continues to hold back pay movement and impacts business confidence. Inflation has fallen over the past year and levels are expected to stay just under the two per cent mark, increasing market pressure underlying pay reviews.
Responses on the whole range between pay increases of up to two and three per cent. Whilst Housing Associations, FM/M&E and Associations and institutes report levels around the two per cent mark as the sectors’ common pay increase, the most common for Residential Care, House Builders and PACCs is nearer three per cent. Healthcare is between the two ranges, with an average of 2.5 per cent.
2. Business Insights
Recruitment and retention challenges continue across all sectors for the second year running, with the greatest difficulties being faced by FM/M&E. Whilst they were acute last year, these levels have persisted. PACCs employers are reviewing their pay structures and salary scales to ensure that pay is awarded at a competitive and consistent level. Ensuring that there is a framework in place to make pay decisions fairly and transparently ensures that consistent decisions can be made. As a result, HR teams fulfil their affordability objectives when it comes to working effectively within their pay budgets.
Job families and pay structures were a common cross-sector theme, with different sectors using these frameworks to predominantly tackle the following headline challenges facing their industry:
Associations and Institutes – to tackle pay inequality;
FM/M&E – to develop salary structures and clear grades;
Healthcare – to address talent shortages in core roles;
PACCs – to ensure pay is competitive in the market; and
Residential Care – to address affordability constraints in light of the National Living Wage (NLW).
Two thirds of employers have had to offer higher salaries to new recruits than those paid to existing employees, a highly popular recruitment device across all sectors.
3. Employer Branding
As part of employers addressing recruitment and retention issues, organisations are increasingly reviewing their employee value proposition. Employers are ensuring that this is consistent across literature and reviewing how compelling the reasons are about why prospective recruits should join the organisation. Younger generations want greater clarity and regular reviews around pay and progression, with companies focusing on creating clear career paths and a clear sense of where individuals fit into the delivery of their vision.
4. Targeted pay actions: a sector overview
Associations and Institutes - employers are driven by internal and external relativities and targeting high performing people when it comes to targeting pay. Tenure is a key challenge in this sector where long service has resulted in year on year pay increases for many, which places financial pressure on HR teams trying to overcome the current talent pool shortage the industry is facing. Competitive pay is designed to attract new, energetic people that can introduce fresh perspectives into relatively traditional organisational structures.
FM/M&E - rewarding high performing employees is a priority in the tender-based business model that underlines this industry, followed by considering internal and external relativities.
Healthcare – massive shortages in clinical staff, including nurses and theatre staff, combined with NLW increases requiring clearer differentiation between salary bands, as more junior roles are pushed up in pay, explains why external and internal relativities and targeting core roles are key considerations in pay actions for this sector.
Housing Associations – employers are driven by external relativities and targeting high performing people, balancing the impact of NLW.
PACCs – employers focus on internal relativities and targeting high performing people. Low levels of employee turnover are the aim of pay parity and competitive pay.
Residential Care – pay actions are mainly driven by external relativities, closely followed by targeting high performing people to reward and retain talent.
5. Out of cycle pay increases
Out of each sector’s annual pay bill, out of cycle pay increases are in operation to the following extent:
Associations and institutes – account for one per cent.
FM/M&E – account for 3 per cent.
Healthcare – account for one per cent.
Housing Associations – account for one per cent.
PACCs – account for 5 per cent.
Residential Care – account for 5 per cent.
‘Inflationary pressures’, ‘Individual employee promotions’ and ‘Market pressures’ are the most common causes for out-of-cycle increases across all sectors.
6. Gender Pay Reporting / Equal Pay
In the second year of gender pay gap reporting, incremental change has been seen year on year. Progress in the PACCs sector was particularly noted in relation to trainee/apprentice quantity surveyors where the gap stood at 40 per cent in 2018 and it has reduced to 30 per cent, illustrating the impact already being felt for entry-level roles and the focus being placed on attracting more women to a traditionally male-dominated industry.
The reporting regulations pose a greater administrative burden to some organisations than others. PACCs organisations are typically smaller which generally creates more work in processing the data. FM/M&E employers report particular problems involved in the industry when it comes to TUPE transfers associated with defined contracts that the organisations compete for which makes the process intrinsically complex. Work is won based on five to ten year contracts which poses greater challenges when it comes to harmonising practices across their organisations, with a number of payroll systems involved in gathering this data every year across tens of thousands of employees. Most organisations are conducting further Gender Pay analysis to identify the key drivers behind their figures, but one third report taking no action on their figures.
Benefits were discussed as part of employers undertaking a general review of providers and assessing the uptake of benefits on offer. This might be related to the overall picture of recruitment and retention challenges, with 40 per cent of employers considering total reward statements in the year ahead according to spring 2019 edition of Paydata’s UK Reward Management Survey. Demonstrating the value organisations are offering to employees through this kind of internal communications device is a key retention tool, whilst benefits make up a critical element of the reward package. Car allowances are something that associations and institutes were focusing on in particular, with tax burdens meaning that employers are less likely to provide company cars.
The impact of NLW rises remains a key concern for employers within housing associations, residential care and healthcare. For the more junior level of roles and the remuneration on offer, wider market considerations come into play as carers can be offered the same level of pay to work in less physically and emotionally demanding jobs, driving recruitment and retention issues in these sectors. NLW rises also mean that pay scales risk being undermined, with employers still needing to acknowledge increased responsibilities for more senior roles with meaningful pay increases; NLW creates additional pressure to make adjustments across the pay scales.
Ethnicity pay gaps are increasingly featuring on HR agendas given the reporting regulations that are being proposed. Sectors are particularly grappling with how to measure these figures when often there is no record of this information on the payroll system. Whilst data on ethnicity is often required on a voluntary and not mandatory basis, organisations also face the difficulty that responses can be much more diverse than those for gender pay, so they are faced with having to ask all employees directly which potentially makes the data collection a significant exercise in itself.
The future of HR analytics was also widely discussed across sector groups. Organisations hope to use this data intelligently and more regularly to monitor and predict labour turnover trends.
Participate in our autumn HR Workshops
Our HR Group meetings enable members to exchange information on topics of interest and offer an excellent opportunity to meet and network with your HR industry peers. Get in touch to register your interest for our next round of HR meetings in the autumn.