With payroll costs being the largest controllable item of total costs for most organisations, managing these costs in a controlled and effective way becomes ever more important.
Reward Strategy
In the UK , a recent survey from the Chartered Institute of Personnel and Development (CIPD), the professional body for HR practitioners, showed that 45% of employers have developed a written Compensation/Reward Strategy. But what does this mean in practice?
Pilat's reward and compensation management experience suggests that a reward strategy needs to answer a number of questions and that it should have a number of components including:
• Business drivers , who do you need, what do you need them to do and how do you need them to do it?
• Market assessment , who do you need, what do they want and what do competitors do?
• Regulatory and governance environment , what is possible and what is acceptable?
• Remuneration policy, how sophisticated do you want to be? For example, what are your business aims, what are the different elements of pay appropriate to these business aims, are there particular practices in your industry sector and what is your stage of organisational development?
Pilat can advise your organisation on all of the above aspects taking account of the fact that the way people get paid and what they are paid has an impact on performance and culture. It is also the case that the highest performers place a greater emphasis on remuneration as a factor that keeps them in their jobs and with the organisation.
Job Evaluation and Grading
Why is one job worth more than another? Is job measurement an exact science or merely a set of assumptions dreamt up a small cabal of senior managers? Pilat has many years of experience in the design and development of fair and equitable job measurement tools supported by our computerised job evaluation software, Gauge. The latter helps to take the pain out of job evaluation, replicating as far as possible the decisions of the job evaluation panel but in a faster and clearer manner, supported crucially by an audit trail of these decisions.
Establishing internal job weight is also vitally important given concerns with equal pay and ensuring that contribution is rewarded equitably.
Job evaluation also provides a basis for decisions about pay structures, including for example decisions on broad banding, job families and career grades.
Market Pay Analysis
Base pay management is even more important in an environment of relatively low pay inflation. This is especially evident in the public sector and not for profit sector where the impact of government funding, inability to raise prices and intense competition for charitable donations means that managing costs are key considerations in both voluntary and public sector organisations.
In the private sector it is vital to know what your competitors pay for individuals with skills and competencies similar to those of your own staff.
Pilat can advise on these issues ensuring that you get maximum value for money from your reward arrangements.
Performance Related Pay (PRP)
Does variable or contingent pay improve organisational performance? Unfortunately, the evidence as such is not clear cut and we recommend a through review of your pay arrangements before you jump on the band wagon.
What is clear is that for PRP to be successful there needs to be clarity around the objectives of having such a scheme. A common issue is the lack of integration with other HR initiatives and the organisation's business strategy. Any PRP scheme also places pressure on line managers to make decisions on pay matters where they a) may lack valid and up to date information about individual performance and b) the necessary skills to make such crucial decisions in respect of pay progression and/or variable pay increases.
We at Pilat have the skills and expertise to advise organisations on performance related pay arrangements. We have no axe to grind and will start from the premise that a clear Business Case has to be made before such a scheme should be contemplated.
Communication and Implementation
The most common reason for failure of new reward arrangements is poor communication and implementation. Reward is a very personal issue and the first question on most people's lips will be ‘how do the new arrangements affect me?'
Clear, timely and comprehensive communication is therefore vital to any review of pay arrangements, as well a clear exposition of what impact the changes may have in both the short and long term. |
