By Charles Cotton, CIPD Reward and Performance Adviser
Over the past week, I have been both fortunate and privileged enough to be able to attend two reward events, the CIPD’s reward conference and the WorldatWork’s annual total rewards conference and exhibition.
For me, one of the interesting aspects of attending both events was what reward issues were similar and what were different. One issue that was discussed in depth at the CIPD’s reward event was reward inequality and fairness. While the UK economy looks set to enjoy one of the highest growth rates among the developed world this year, there are concerns that employees may not benefit in this growth. Part of the explanation for this has been the UK’s poor productivity to date. Unless this starts to improve, wages for most employees will not grow in real terms. Hence the interest among delegates about how both performance-related pay and investment in employee skills could be used to help boost productivity and salary levels. There was also concern that the way that rewards were being distributed was being perceived as unfair and so having a negative impact on employee engagement and, through this, on levels of productivity.
At the WorldatWork conference, personally I did not hear much about these concerns, though I admit that I could have been in the wrong place at the wrong time. However, what I did notice was that while we were looking at how we could reinvigorate our traditional performance-related pay approach, in the US the debate was whether merit-based pay was still useful. Various high-profile employers were cited as having removed their numeric ratings from their annual performance and pay cycle. The feeling was that the current process takes up too much valuable time, causes discontent among employees and line managers and the merit budgets are so small that meaningful differentials are impossible unless you skew the rewards to the top 10%, which could alienate most of the remaining employees.
In the future, pay and performance would still be linked, but compared with the traditional system the emphasis would be on continuous performance management and development, underpinned by honest and meaningful discussions between staff and their line managers, that workers would be rewarded and recognised for their achievements in a variety of ways at times that meant sense to the business and employees, and all the time that had been spent on ranking performance would now be spent on rising performance. So a case of ‘pay for performance is dead, long live pay for performance’.
One area of commonality between the two events was around the importance of new technology, not only as a tool to engage with employees about their pay and benefits but also as a way of making reward simpler to manage for the business. The WorldatWork exhibition space was dominated by technology firms showing how their systems would make it easier for employers to manage salary benchmarking or employee wellbeing initiatives. Though one of the concerns of the UK reward conference was how employers could integrate these various point solutions. The danger was that because HR had been merrily adding various technology solutions to the company IT ‘Christmas tree’ over the years the whole edifice had could become unbalanced and was liable to fall over. What was needed was for firms to focus first on a creating the right HR technological platform which then could be used to integrate the various HR and reward programmes, such as development or recognition.
To sum up, both events provided a window on a wide range of issues challenging reward professionals, some of which are common and some of which are different. As Anne Ruddy, CEO of WorldatWork said in her address, one of the aims of a conference is not that you should copy what great firms do but to think like great firms do. Hopefully, his blog will also give you food for thought.
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