Gloom in the economy - does it call for a ‘new’ approach to pay and reward?
19 June 2008 | Posted in Base Pay, Economic Downturn, Employer of Choice, Total Reward
Good news has been in short supply this week. UK Inflation levels continue to rise while the economy seems to be heading in the other direction. Even the Governor of the Bank of England’s annual Mansion House speech warns us that “it won’t be nice” where pay rises will be lower than national productivity.
Hmm. While this may affect some industries more severely, it also highlights the issue of base pay being in the spotlight. While almost half of UK organisations no longer make annual cost of living pay rises, does it make sense to continue focusing on it? Base pay does need to be ‘right’ though in practical terms there is rarely any benefit in paying above the market competition.
We know that some of the most admired employers can pay less to attract their candidate of first choice. Why? These employers differentiate themselves on factors such as career opportunities; working relationships and employee wellbeing. Differentiation on pay alone is costly and if the economic downturn continues as the CBI predicts then shifting the focus from base pay towards a ‘total reward’ approach must be considered going forward. Have a look at the Just Rewards newsletter on the role of reward in an economic downturn.
Tags: Base Pay, Economic Downturn, Employer of Choice, Total Reward
Jackie Cameron Says:
June 20th, 2008 at 10:01 am
Hi Sylvia. I like the blog and the link to the newsletter. The reason I started blogging was on recommendation from a techy friend of mine who told me that the day of the newsletter was numbered and the day of the blog is here!
Recognition still counts - love that! For many years I was a tax consultant and I looked at the numbers. When I started to move into personal development I went through a period of leading an organisation which provided international relocation services. The packages for those were extraordinary - in terms of the amounts paid and the extras paid for.
Still I had conversations with assignees bemoaning the fact that their employer did not value or appreciate them. Some felt that an “out of sight out of mind” approach existed and others were horrified to find out that when their assignment was finished ( and sometimes the assignment completion bonus had been paid) they were expected to fit back into the role similar to the one they had left - not the one that their new experience merited ( in their view).
So let’s continue make a case for “recognition” in non financial terms.
Rosie Sherry Says:
July 1st, 2008 at 11:46 pm
I would love to see more companies create a sense of community, this will naturally give people a sense of belonging and make them not want to leave! Unfortunately, it’s often not on the agenda of most companies.
I think Zappos do a great job of the community thing.
I suspect with predictions of a gloomy economy that most people will generally be happy to just keep their job.