Salary reviews & employee engagement
Many people around the table face the challenge of tight budgets resulting in pay freezes, low salary increases or small or no bonus pay outs. Typically salary increases around the table seemed to be around the 3% mark. There are very few organisations that consistently pay above market rate and many pay below this so the challenge for them is around how to deliver creative solutions.
Graeme Mooney at United Utilities commented: “The creative use of a small budget is where reward professionals have an opportunity to step in and show how our thought processes and solutions can move us away from how we might have operated in the past.”
There was significant discussion amongst the delegates about the method by which pay awards might be delivered, specifically in respect of consolidated versus unconsolidated approaches. An approach was discussed where organisations might determine the overall cost of providing a consolidated award (i.e. including the flow through costs) and then decide to spend the equivalent cost on one-off/lump sum unconsolidated awards. This uses the budget in a way that can engage employees as their efforts are acknowledged in a lump sum payment, and the business is able to retain the same base pay position without the flow through costs of pensions, overtime, etc, that would normally accompany a standard consolidated pay increase.
There also remains a key challenge in how to attract the right talent into your organisation when you have limited budgets, particularly when you have to go out and search for that talent rather than them coming to you, as this often brings about the need to consider compensating the candidate for incentive arrangements that they would leave behind. Several organisations have decided to pay a lump sum over the first one to two years that is not linked to pension or bonus payments but with a claw-back type arrangement agreed so that the payment acts as a retainer as well as an attractor.