But the well publicised events of this past month raised wider strategic issues. Two high profile ones must management effectiveness based on the BBC’s handling of the situation and the accountability that arises from public funding through licence fees. And this brings up the question of where responsibility for setting market rates sit. Yes, celebrity pay deals may not be salary packages though the inflationary effect is not dissimilar.

So perhaps the BBC did have to ‘fight off’ rival offers from Channel 4 and ITV when the 3-year deal for Jonathan Ross increased in 2006 by a cool £4.5m to £16m. But did this play a part in Simon Cowell later agreeing to a mega million deal with ITV? The question of who leads (or should lead) the market rate for talent looks set to surface again.

Is it just a debate about the perceived worth of celebrities or does it also have a direct impact on salary packages in the public and private sector? And, if there is an impact, how does this affect issues such as accountability? Tell us what you think..

ShareThis

While there may be fewer surprises about how we got there, what impact does the current economic situation have on reward? Since this may sound like an obvious question to some, perhaps we should ask how can reward help to navigate the current situation? As always there are winners and losers with online businesses and exporters to other currencies benefitting greatly. However for organisations with less disposable cash as well as employers looking for a decent return on investment then consider the following:

• Know your current position – Are you clear on what reward packages you offer people across the whole organisation? Are employees aware of what you offer them? If so, are they relevant to their requirements? And do they represent good value when taking company cost into account? The first step is to analyse what you’ve got and the cost of providing pay & benefit components including administration, statutory charges etc.

• Define any gaps against your budget and goals – When there is pressure to cut costs, taking a longer terms view will reduce the risk of costly mistakes. The analysis should highlight any duplication of benefits such as insurance relating to life; health cover, income protection etc. which can overlap with sick pay schemes. Consider if an income protection policy that covers 75% of salary to aged 65 is really appropriate going forward. Consider how this lines up with your contractual commitments. Think carefully before considering making changes, but don’t ignore them.

• Consider salary sacrifice schemes (for UK based organisations) – While the popularity of salary sacrifice or salary exchange schemes has been growing in the UK, now is certainly a time to consider introducing them or increasing their scope. The national insurance savings they can offer to employers and employees’ cannot be ignored. With a wide range of benefits eligible for sacrifice such as pensions; childcare vouchers; mobile phones etc. there is plenty of scope. And the downsides? There is the inevitable administration required to establish and run such schemes however this is typically outweighed by cost savings. As with all salary sacrifice or salary exchange schemes, they are not suitable for employees receiving the national minimum wage.

• Recognition still counts – When the pressure is on, the importance of recognition can get overlooked by line managers. This is turn can lead to poor customer service and reduced motivation levels. Ensure that you have a recognition scheme that contributes towards people choosing to use their discretionary effort to ‘go the extra mile’.

• The sum is greater than its parts – When there is less cash, it pays to focus on the total package when communicating with employees. And speaking of this, there is much merit in practices such as Total Reward which integrate reward elements such as the working environment, career opportunities and recognition as well as the financial rewards. While total reward is not a ‘quick win’ it is worth considering the scope for career development or flexible working which could prove more valuable than say a 2% pay rise.

• Don’t cast aside goals which are integral to your values – Phrases such as ‘people are our greatest assets’ which can wear thin for employees when they experience practices that don’t match up to the rhetoric. This certainly true when executing difficult decisions such as redundancies. This also holds true for organisations striving to be an employer of choice.

How are you managing the current economic situation?

ShareThis

I know when I was setting up the Just Rewards blog, the comp blog that most inspired me is Ann Bares Compensation Force blog. Apart from being one of the few compensation blogs out there, the quality is really high and Ann has a great knack in picking topical issues that matter to people. I recommend it strongly.

Another compensation or reward blog worth looking at is Ryan Johnson’s blog on the World at Work website. The posts are usually short, but oh so regular - which I really admire.

Are there other reward or compensation blogs that you would recommend? Or perhaps there are some HR blogs that cover reward issues in some depth? Perhaps there are reward or compensation blogs from outside the UK and USA that don’t come up in the search engines? Looking forward to seeing whats out there!

ShareThis

So what has all this got to do with reward? Well, it was interesting to see that The Governor of the Bank of England decided to reject his near 40% pay rise last month. It is understood that Mervyn King thought it would be ‘inappropriate’ given the current economic climate. Though with a pension pot of over £4m the pain may not be too great! But on a serious point, such a decision is still uncommon as Directors in charge at Northern Rock and the Financial Services Authority have not been penalised in the same way as Northern Rock shareholders.

On a matter closer to home, my boys who have just turned 7 and 9 have been talking about pocket money or allowances and how they were old enough to get it by now. Realising the importance of being prepared, I decided to check out the situation. For a start, do children just receive it or does it actually need to be earned? Or is it given but can be lost for bad behaviour? Deciding that the boys’ would need to earn it was the first decision. Then there was the question of the going rate. While my boys’ feedback on what their friends’ pocket money was unsurprisingly inflated over that of their parents’. This was however the most useful information. After all, they would probably talk about it in the playground and no, friends’ parents did not know of any 9-year old receiving £10 a week!

By comparison, the Google searches were a minefield that was best left alone. Fast forward a week; some detail in between and the new system is now in place. Does it work? Week one has been good as they have worked hard to stay ahead of the important points which convert to their allowance. And yes, there has been help in preparing meals; keeping their rooms tidy and less persuading them to read their books during the holiday. But it is early days and the thrill of the daily points chart may wear off….

ShareThis

The broadcasting Trades Union Bectu heavily criticised the decision at a time when jobs are being lost. The BBC remuneration report certainly makes interesting reading if you compare the double digit increases in total remuneration for some executives compared to last year. However, the report makes it clear that the Corporation should not lead the market on pay and, in it’s own words, should be ‘positioned around the median of the market’ for base pay. While the outcome may not be excessive relative to some private sector executive awards, it raises the question of how a publicly accountable body should reward it’s top team.

What about the pay increases? And should the BBC be awarding bonuses at such a time? Or are these changes just part and parcel of the change process? What do you think?

Have a look at the Just Rewards newsletter on executive reward.

ShareThis

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.

ShareThis

This was just one of the questions we discussed at last week’s E-Reward Conference when leading the performance pay workshop for two groups. There was some consensus that performance pay is not perfect, however for private sector participants it offered a more tangible way of rewarding those who contributed to business goals. This view also lines up with the CIPD Reward Management Survey 2008 findings where 87% of UK employers (the survey covers 2 million employees) reward performance.

One key challenge is deciding what performance gets measured and how to ensure that the behaviours used to achieve performance goals are appropriate. When used effectively, performance pay has the opportunity to reinforce culture and values, while making it clear what the performance expectations are. However, it can equally work against a company’s values when inconsistent decisions are made by senior managers, say where individuals perform at a similar level are treated differently. Performance pay was topic of a past issue of Just Rewards.

And over the past year, this is becoming a greater challenge for clients and HR people I talk to. Is this familiar? How do your line managers deal with this?

Let me know what you think…

ShareThis

The real benefit of blogs is the opportunity to share views and interact. The recent online comments on fuel prices in The Times, Guardian and Telegraph is one such example. Feedback has been the lifeblood of the Just Rewards newsletter with readers suggesting (by email and phone) over half the topics that we’ve covered. For users of LinkedIn, the Compensation & Benefits Q&As is popular, though where are all the reward blogs? While there are many HR blogs out there including Personnel Today, I believe that this may be the first UK based reward blog that I know of. Perhaps more will come online this year?

Topics that we plan to cover over the next couple of months are performance pay and the role of reward in an economic downturn. We’ll start off with performance pay and while it has been used by companies for decades, it continues to generate debates on whether it actually raises performance levels or not. Have you got something you’d like to share on this topic?

I would really like to hear your feedback and you can do that by clicking on the ‘comments’ link just to the right of the date, at the top of this post. 

ShareThis