For the payroll professional, reward can sometimes mean no more than processing bonuses in the end-of-year payroll. But as organisations turn their focus to retaining the key people required to bring them out of recession, reward plays a central part. Whether your remit includes HR or not, payroll professionals can contribute to retention initiatives in three key ways:
1. Evaluating your current reward strategy
2. Recognising the value of your ‘employer brand’
3. Initiating talent management for everybody
1. Consider the reward. It is a fact that times are changing rapidly for those of us in HR and payroll, and Reward Practitioners in particular.
In this economic environment, organisations are reducing their cost base through redundancies, implementing pay freezes, placing an embargo on recruitment or some combination of these measures. It is likely that those companies that find the right balance now between managing costs, retaining key employees and maintaining staff morale will be best placed to weather the current economic storm and to take advantage of the recovery when it arrives.
Effective reward management is a mix of extrinsic factors which include base salaries, bonuses, allowances and benefits and intrinsic factors such as role design, career and personal development opportunities and leadership style. The latter is a key relationship that you ignore at your peril and it is worth remembering the old adage that people leave managers, not companies.
Employees are becoming increasingly sophisticated in terms of their expectations and with increasing awareness of the segmentation in the employee population (eg based on age, length of service, gender, level of responsibility and/or lifestyle), this means that there are no ‘one size fits all’ solutions. So what better reason can there be for reviewing your reward strategy and the associated policies and practices to ensure that it is cost effective, delivers value for money to the business and provides employees with a reward package that they value through a flexible benefits solution?
2. Believe in the brand. Everyone understands the importance of the brand in a competitive marketplace.
UK organisations across both public and private sectors spend millions every year developing, improving and maintaining their brand. Organisations are so focused on what their customers think about their products and services and so it makes sense to invest time and money on their branding as an employer.
The truth is that the need to effectively and accurately position and communicate your organisation’s employer brand is just as important now in these lean times, if not more so.
As we emerge into a new economic environment, the fight to retain and attract new talent will be increased. Businesses will need to be transparent in what they deliver.
Your employer brand should begin with your existing workforce – an effective, stable and motivated workforce, who understand, develop and deliver the beliefs, actions and services that serve to maintain and strengthen your employer brand.
The engagement, motivation and retention of existing staff must become the central focus of the brand strategy, not only to chart a course through the stormy waters of a recession, but to ensure the organisation is right-sized, focused and ready to take best advantage of the forthcoming economic upturn.
3. Manage talent, top to bottom. Organisations need to recognise that talent exists at all levels - not just a selected group of special people that have been sprinkled with corporate fairy dust.
Everyone in an organisation has talent and the job of management is to discover that talent, shape it and point it in the right direction. The distinction is important and will shape people strategy. Narrow definitions of talent risk ignoring layers of people who are essential to the running of the organisation, whereas broad definitions can lack focus and result in little getting done. It’s really important that internally, organisations ensure that there is a common definition of ‘talent’ so that everyone who manages people is clear about what the organisation wants.
Talent management is fundamentally about introducing a new mindset – the idea that we need to create a culture where everyone believes in the value of hiring the right people, developing them, rewarding them appropriately, managing their performance and retaining that talent. This may mean switching the focus away from the top 250 superstars and taking a wider view of talent, seeing it as inclusive rather than exclusive.
What should you be doing?
Organisations should ask themselves:
The answers to these questions will provide the basis for an overhaul of your organisation’s reward strategy and the associated policies and practices for both extrinsic and intrinsic rewards. The first step however should be to look at the priorities for your organisation and establish an action plan. You will also need to consider whether you have the appropriate tools for the job.
For instance, job evaluation is increasing in popularity amongst UK firms with alternative approaches being developed to improve the process. Not only does it provide a firm foundation for an open and transparent approach to provision of the extrinsic elements of reward, it provides organisations considering restructuring with the information required to make informed decisions.
When considering changes it is essential that HR professionals are able to produce accurate, reliable costing information to support recommendations and inform decisions by senior management teams. In most cases organisations use spreadsheet applications for this purpose, although these can be limited as it can involve advanced knowledge and skills in using the software, in particular when modelling various different scenarios. The alternative is to use one of the proprietary packages available for this purpose, providing information at your fingertips. The advantage being that these packages have the required facilities off the shelf and avoid the development lead times and costs associated with spreadsheets.
The issues we have talked about reflect the ways in which retention can be improved and vital skills remain within the company. The brand, reward and talent management need to be fine tuned and managed carefully to ensure the workforce is armed and ready for the recovery ahead.
Tips for successful reward and retention from NorthgateArinso: