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An Approach to Total Reward

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1 An Approach to Total Reward
Peter Reilly, IES Lis McCormick, Camden

2 Adam Smith in 1776 on total rewards
Employees should maximise their ‘total net advantage’ or ‘total utility’ of work. This means not just wages but also: the agreeableness or disagreeableness of work difficulty and expense of learning it job security responsibility the possibility of success or failure.

3 The development of total reward
External pressures TR models research Action Plan Strategy Design Delivery Business drivers Positioning TR Employee needs External benchmarks

4 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

5 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

6 The Dean Shoesmith model

7 Total reward model - Towers Perrin
TRANSACTIONAL (TANGIBLE) PAY/REWARD base pay contribution pay shares/profit sharing recognition BENEFITS pensions health care perks flexible benefits INDIVIDUAL COMMUNAL LEARNING AND DEVELOPMENT workplace learning training performance management career development WORK ENVIRONMENT core values leadership employee voice job/work design RELATIONAL (INTANGIBLE)

8 Cabinet Office total reward
Quality of work Work/life balance Inspiration/ values Tangible rewards Future growth opportunity Enabling environment 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

9 Another approach to total reward
Individual growth Development Training Career enhancement Performance management Compelling future Vision/values Growth/success Image/brand Total pay Base Variable Benefits Recognition Positive workplace People focus Leadership Collegiality Job content Trust/commitment Involvement/openness Adapted from Schuster and Zingheim, 2000

10 Method: business drivers
Interview senior managers Interview with HR director Review business strategy documents, including SWOT analysis Look at CAA/other audit reports This should define what the organisation is seeking from employees, and what part reward might play

11 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

12 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

13 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

14 Different foci Total reward usually focuses on some combination of:
The brand – developing an attractive value proposition for attraction/retention Understanding – ensuring employees realise the full value of their reward package Choice – delivering a degree of reward personalisation believing that it is now required Segmentation – determining what different groups react to/are influenced by

15 Delivery options on Total Reward
Strategic Tactical Focus/ Employees All Segments Total rewards philosophy Fully flexible packages Leave buying/selling Total reward statements Different reward offer for different groups Focus on key groups, eg hipots Flexitime for administrative staff Childcare vouchers

16 In practice… Variable levels of Total Reward integration
Average (where 1 is not integrated and 5 is fully integrated) CIPD Reward Survey

17 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

18 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’

19 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

20 Employee segments Looked at the following groups:
female service delivery staff, lower grades male service delivery staff, lower grades administrative/clerical professionals young, new hires well established staff specific directorates senior managers

21 Components of total reward: theory
Attractive organisation Vision/values Growth/success Positive brand Effective organisation People focus Leadership Collegiality Trust/recognition Involvement/openness Development Development/training Career enhancement Total remuneration Base Variable Benefits Adapted from Schuster and Zingheim, 2000

22 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 Effective organisation Trust/fair treatment for both Males: Involvement & openness, management capability Women: Work conditions and good atmosphere Development Males have greater ambitions to develop Females may want specific skills Total remuneration Pension important for both Flexitime more important for men; pay a bit less so

23 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

24 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

25 … thank you

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