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Andrew Walker Croner Reward April 2009. Reward and the HR Practitioner. Subjects covered. Some background The general landscape and some specific research Where does reward fit in right now? Q&A. Croner Reward – An Overview. Founded 1972

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subjects covered
Subjects covered
  • Some background
  • The general landscape and some specific research
  • Where does reward fit in right now?
  • Q&A
croner reward an overview
Croner Reward – An Overview
  • Founded 1972
  • Part of Wolters Kluwer (UK) Ltd since October 2001
  • Researchers, Publishers and Advisers
  • Publish 60 – 70 surveys each year
  • Undertake 100 – 120 Job Evaluation projects
slide4

Surveys

SalarySearch

Intellectual

Asset

Consulting

Research

Reward services

Regional

National

Sector Specific

Online

E-commerce

Job Evaluation

Pay and Grading

Executive Remuneration

Other Consulting

MRR

Overseas pay

Company Car

Benefits Research

important pressures on pay rises
Downward Pressures

Inflation

Company Performance

Problems raising prices

Global Competition

Equal Pay

Economic climate

Important pressures on pay rises

Upward Pressures

  • Inflation
  • Company Performance
  • Recruitment Problems
  • Retention Problems
  • Industry Pay Pressure
  • Union Recognition
  • Skill shortages
  • Equal Pay
the landscape autumn 2008
The Landscape – Autumn 2008
  • Survey of 150 employers
  • Specifically asked about the landscape
  • Conducted in a 48 hour period in September 2008
  • A real snapshot of what employers think
the landscape1
The Landscape
  • Based on their own experience,
    • 83% said inflation was applying upward pressure to pay right now
    • 36% told us that company performance was having a down ward effect on pay
    • Roughly half felt that skill shortages were having an upward effect, but the remaining 50% mostly saw this as having no impact currently
    • 79% said that trade union activity was having no effect either way on pay setting in their organisation
  • Thinking about what they have heard anecdotally,
    • 92% thought inflation was affecting others by applying upward pressure
    • 44% thought that company performance was pushing pay settlements down
    • 67% thought that trade union activity was pushing pay levels up in other organisations
the landscape2
The Landscape
  • Asked about their last review
    • Reasonably even split between more, less, the same
    • Average 3.92%
    • Nearly half budgeted for the same as previous year
  • Asked about pressure on pay 42% said they are under pressure to give more, although 41% don’t know yet for sure
  • Asked about next pay review
    • 44% would the same as last year
    • 25% would give less
    • Average 3.85% predicted
    • Only 30% would give more in the next pay round
  • So despite all of the indicators, more of which pointed to upward pressure, most employers gave the same as or less than they did the previous year
the landscape now
The Landscape - Now
  • Survey of same employers
  • Asked broadly the same questions about the landscape
  • Conducted in a 1 week period in April 2009
  • A new snapshot of what employers think
the landscape now1
The Landscape - Now
  • Based on their own experience,
    • 43% still said inflation was applying upward pressure to pay right now
    • 38% told us that company performance was having a downward effect on pay
    • Roughly two thirds feel that skill shortages are having no impact on pay levels currently
    • 80% said that trade union activity was having no effect either way on pay setting in their organisation
    • Close on 50% state that “general market forces” are applying downward pressure
  • Thinking about what they have heard anecdotally,
    • Only 26% think inflation is affecting others by applying upward pressure, down from 92% in September
    • Less than 60%% think company performance is pushing pay settlements down
    • Around half think that trade union activity is pushing pay levels up in other organisations, compared to nearly 70% last time
the landscape now2
The Landscape - Now
  • Asked about their last review
    • Still reasonably even split between more, less, the same, but with a spike in the “less than” group
    • Average still at 3%, but that's down from 4% last time
    • Nearly half budgeted for the same as previous year
  • Nearly a quarter implemented a 'pay freeze' and 2% gave a pay cut.
  • 50/50 split on paying bonuses.
  • Where there was a pay cut, it applied to all staff
the landscape now3
The Landscape - Now
  • Some new trends emerging
    • 65% have implemented a recruitment freeze
    • Nearly 60% have cut jobs
    • A further 30% have stopped overtime and/or cut shifts
  • Looking forward
    • 62% are planning to cut jobs further
    • Over 50% plan to stop overtime and /or cut shifts
    • The recruitment freeze remains in place for the 60% for the time being
  • Challenges
    • 66% claim that a drop in revenues is their biggest challenge right now
    • But a third say that they are at risk because their own customers have gone out of business
    • Nearly a third say their biggest issue is to carry out a restructure or a downsizing
the landscape now4
The Landscape - Now

“Approach was - if we want to be here tomorrow we need to bite the bullet now”

“I think some companies are using the climate to reduce salaries when there is no real need for them to do so.”

“It's mostly about sales If no one is buying companies will experience a very tough time.”

“The single most significant factor is really the uncertainty about how things are going to impact us. We provide international / expatriate health insurance, and so far seem to be riding the storm.”

“impact of NMW on our lower paid workers”

“No use of agency staff”

possible actions
Possible actions
  • Pay freeze – simply stop giving pay rises
  • Pay pause – commit to current rise, but only when appropriate
  • Pay cut – Reduce pay for same hours
  • Reduce hours – cut overall paybill costs
  • Reduce or stop overtime
  • Cut shifts
  • Freeze recruitment
  • Redundancy
two questions
Two Questions
  • What is your biggest strategic reward challenge right now?
  • What is currently your biggest day to day reward issue?
reward strategy a simple definition
Reward Strategy -A Simple Definition

“ A Reward Strategy is a means of using base pay and/or other forms of reward to promote positive behaviours and values which contribute to the achievement of the organisation’s corporate goals.”

operational issues
Operational issues
  • Historically cumbersome pay structures
  • Inconsistent and badly designed
  • Designed to give control over progression, not flexibility
  • Not integrated into business
  • Lack of engagement
  • Often complex and poorly understood
business issues
Business issues
  • An HR/Personnel/Finance function
  • Paper driven
  • Too much discretion
  • Lacking transparency
  • Unequal
opportunities and challenges
Opportunities and Challenges
  • The drivers of change?
  • What are the opportunities?
  • How big are the challenges?
  • How might these impact on reward systems and strategies?
what are the drivers of change
What are the Drivers of Change ?
  • Technology
  • Thinking and approach
  • The world in which they and we operate
  • Legislative framework
opportunities and challenges1
Better performance

More direct involvement

Business integration

Improved management

A genuine ROI model

Investment

Acceptance/Acceptability

Change management

Equality

Time and resource – in house vs outsourced

Opportunities and Challenges
impact
Impact
  • A new way of working
  • More business focused
  • Flexible without being chaotic
  • Tighter without being constrained
job evaluation
Job Evaluation
  • Users wanted relevant, flexible tools
  • Transparency was crucial
  • Not a “black box”
  • Simplicity the watchword
job evaluation1
Job Evaluation
  • Moves away from vast structures
  • Local system, local impact
  • But integrated, flexible, responsive
  • A business tool
job evaluation2
Job Evaluation
  • Job Evaluation as a tool, not a God
  • Felt Fair, Consistent, Defensible
  • Linked to market benchmarking
  • Informed decision making
  • Equality
job evaluation3
Job Evaluation
  • Technology allows for this
  • Thinking has enabled the process
  • As the world gets smaller, the links get bigger
  • Equality and transparency
job evaluation4
Job Evaluation
  • PC based and online systems
  • Paperless Job Descriptions
  • Roles and competences
  • Tailored factors
  • Linked directly to personnel records and other systems
  • Not a reason not to do something
where does this lead
Where does this lead?
  • Tension between “off the shelf” and flexible systems
  • Pay systems that reflect reality
  • Enable companies to pay on contribution, not service
  • Better visibility on equality
salary surveys
Salary Surveys
  • Reflect the reality in the market (s)
  • Map to organisational shapes and structures
  • Have to cope with new and emerging skill sets, jobs and industries
  • Are dynamic and evolving
  • Whilst remaining consistent
salary surveys challenges
Salary Surveys - Challenges
  • Job titles – new or just different
  • Benchmarks must be responsive
  • More “special” surveys
  • Sample sizes change
  • Data groupings alter
  • Participation model has to evolve
environment
Environment
  • Less about base pay
  • Measuring the mix
  • Best practice – is there one ?
  • Technical design – broadbanding, competencies
  • How does it all fit together?
  • Equal pay issues
technology
Technology
  • Allows for more immediate participation
  • Allows for faster processing
  • Gives more flexible/relevant outputs
  • Offers alternative delivery channels
  • Also gives rise to alternative sources
  • Face validity issues
where does this lead1
Where does this lead?
  • Dilution in survey value
  • Time/cost/benefit
  • Smaller, more focused surveys
  • Spreadsheet, CD and Internet delivery
  • E-commerce – data as a commodity
consider this
Consider this
  • With flexibility comes responsibility
  • Have contingency plans
  • Do not be afraid to react to change
the last word
The Last Word
  • The drivers allow real change to take place
  • More flexibility?
  • More direct participation
  • Here to stay