the institute for employment studies an approach to total reward peter reilly, ies lis mccormick,...
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the institute for employment studies
An Approach to Total Reward
Peter Reilly, IESLis McCormick, Camden
The development of total reward
External pressures
External benchmarks
Employeeneeds
Businessdrivers
PositioningTR
Action Plan
• Strategy
• Design
• Delivery
TR modelsresearch
Methods: external pressures
Review the work environment in terms of:●labour market●changing demographics●social/economic pressures●cultural norms/expectations●legislation/government imperatives
This should provide a context within which the organisation operates. It affects management thinking and employee perceptions
Method: models
Inputs to the research from:● Management consultancies
(Hay, Towers, etc.)● US consultants/commentators
(eg Schuster and Zingheim)● Academic research
(eg Armstrong, etc.)● IES’s own work
These offer a framework that allows you to make sense of the data you gather and organise it
to give a meaningful results
The Las Vegas model
PAY/REWARD
• base pay
• contribution pay
• shares/profit sharing
• recognition
TRANSACTIONAL (TANGIBLE)
RELATIONAL (INTANGIBLE)
IND
IVID
UA
L
CO
MM
UN
AL
LEARNING AND DEVELOPMENT
• workplace learning
• training
• performance management
• career development
WORK ENVIRONMENT
• core values
• leadership
• employee voice
• job/work design
Total reward model - Towers Perrin
BENEFITS
• pensions
• health care
• perks
• flexible benefits
Cabinet Office total reward
Quality of work Work/
lifebalance
Inspiration/
values
Tangiblerewards
Future growthopportunity
Enabling environme
nt
• Supportive environment• Recognition of life cycle needs• Flexible work & retirement
options• Security of income• Social environment
• Perception of the value of work
• Challenges/ interest• Achievement opportunities• Appropriate freedom &
autonomy• Workload• Quality of work relationships
• Quality of leadership• Public services values• Promotion of diversity• Reputation of the organisation• Risk sharing• Recognition of achievements• Dialogue, consultation,
communication
• Competitive pay & progression
• Good benefits• Incentives for higher
performance• Recognition awards• Fairness of reward
• Learning & development beyond current role
• Career advancement opportunities
• Regular feedback on performance
• Physical environment• Tools & equipment• Training for current role• Sound IT/ work processes• Safety/ personal security
Hay Group
Another approach to total reward
Adapted from Schuster and Zingheim, 2000
Compelling future
Vision/valuesGrowth/successPositive brand
Individual growthDevelopment/trainingCareer enhancement
Positive workplacePeople focusLeadershipCollegiality
Trust/recognition Involvement/
opennessTotal remuneration Base
VariableBenefits
Method: business drivers
Interview senior managersInterview with HR directorReview business strategy documents, including
●SWOT analysisLook at CAA/other audit reports
This should define what the organisation is seeking from employees, and what part reward might play
Method: employee needs
Conduct focus groups with a cross section of employees by:● grade● length of service● gender/ethnicity● function/occupation
and/or Conduct an employee attitude survey Review results of previous surveys/reviews
The aim is to ascertain why staff join and stay, what motivates/demotivates them at work,
looking at reward in the broadest sense
Method: benchmarking
Take account of what other similar organisations
do regarding Total Reward
Examine lessons from those regarded as strong exemplars of Total Reward
Consider general or specific messages about recruitment, retention, motivation in the sector
Aim is to take account of good practice and position this exercise
in the context of others’ experiences
Action Plan
Strategy - link to other HR initiatives
Design - establishing cost/benefit and risk of change
Delivery - especially communicating nature of Total Reward and value to employees
Different foci
Total reward usually focuses on some combination of:
1. The brand – developing an attractive value proposition for attraction/retention
2. Understanding – ensuring employees realise the full value of their reward package
3. Choice – delivering a degree of reward personalisation believing that it is now required
4. Segmentation – determining what different groups react to/are influenced by
Delivery options on Total Reward
Total rewards philosophy
Fully flexible packages
Leave buying/selling
Total reward statements
Different reward offer for different
groupsFocus on key
groups, eg hipots
Flexitime for administrative
staff
Childcare vouchers
Strategic Tactical
Focus/Employee
s
All
Segments
In practice…
4.08 3.742.62 2.6 2.55
Pay Benefits
Learning and Development Other non-financial rewards
Work-life balance
Average (where 1 is not integrated
and 5 is fully integrated)
Variable levels of Total Reward integration
CIPD Reward Survey
Broad methodological options
Deductive approach● take a model and see how well it applies● use the management perspective and see
how well employees fit
Inductive approach● collect the views of staff and make sense of them● interactively fit with a model● see what gap there is between employee
and management position
The Camden Context
Four-star, highly improving Council
Embarking on a major project to modernise reward structures (Performance, Development & Reward Framework)
Clear view of where we need to be in reward terms as a business; less clear on our employee’s views and aspirations
Capital Ambition/IES research project an ideal opportunity to ‘close the loop’
Approach used at Camden
8 structured discussion groups, segmented to reflect:● grade● work pattern (FT/PT)● length of service● work activity● gender
simple questionnaire to complete employee total reward survey (online) re-analysis of recent general staff survey
Employee segments
Looked at the following groups:female service delivery staff, lower grades male service delivery staff, lower gradesadministrative/clericalprofessionals
●young, new hires●well established staff●specific directorates
senior managers
Components of total reward: theory
Adapted from Schuster and Zingheim, 2000
Attractive organisation Vision/values
Growth/successPositive brand
Development Development/trainingCareer enhancement
Effective organisation
People focusLeadershipCollegiality
Trust/recognition Involvement/
opennessTotal remuneration Base
VariableBenefits
Differences in reward perceptions e.g. male v female service delivery
Attractive organisation
• Males more interested in brand – proud to work for council
• Females less attached to brand
Development
•Males have greater ambitions to develop
•Females may want specific skills
Effective organisation
•Trust/fair treatment for both •Males: Involvement & openness, management capability
•Women: Work conditions and good atmosphere
Total remuneration •Pension important for both•Flexitime more for important men; pay a bit less so
Pilot results
Describe an organisation we recognise overall:● Pension well regarded – but not well understood!● High levels of pride in job for those
in client-facing roles● Narrow view of what constitutes ‘development’
… but with one or two surprises:● More satisfaction with pay than we expected● Strong desire for development among
male service providers
Pilot outcomes
We will ‘reverse check’ the pilot results via our Employee Network
Results provide an important justification for, and verification of, our planned approach
Results won’t change what we do; but
● They give additional confidence around ‘fitness for purpose’
● They’ll inform how we segment and package the Performance, Development & Reward framework
● We will amend the emphasis in our communications
… thank you
www.employment-studies.co.uk