I can’t afford to give pay increases!!

04 Jan
by Donna Obstfeld, posted in Annual Leave, Benefits, Blog, pay, Reward, Total Reward, Voluntary Benefits   |  No Comments

As I speak to my clients, I pick up on general trends. Sometimes it is based on stuff they have heard in the news, sometimes it is the fear of forthcoming legislation; but recently there is one trend which is repeated by almost all of my clients – pay increases! Staff are asking for them because the cost of living is on the increase, but companies can’t afford to give them as the economic future is so uncertain.

Going back five and even ten years, pay increases were generally given by small companies at about 5% and by large companies at 5 – 10% depending on the industry, company and individual performance. In these instances, the pay increase was above inflation and employees generally felt valued.

Today, with RPI at 5.4% and CPI at 5% these sorts of pay increases, if even possible, are barely covering Cost of Living increases. In many cases employees really do understand the pressure their management is under and would prefer to have a job with a low pay rather than no job at all, should the company go out of business. However, employees still need to be able to live: feed and cloth their families, put their children in childcare to enable them to work and to provide an adequate standard of living. As inflation increases and pay rises are not achievable, employers are having to look to alternative ways of motivating staff, ensuring they feel valued and remain engaged in the company, helping it to achieve its aims and objectives.

So, how are companies doing this? The answers vary based on size, industry and performance, but here are some ideas which can be adopted.
Communication and expectation setting
Talk to your staff. Be open and honest with them. If company performance is good, tell them, if it is bad – tell them. If you have to make changes to their compensation packages, tell them why and tell them when you will review the situation and what changes you need to see to provide a platform for restoration of their package. If there are decisions you are making to save costs, consult with staff – they may have useful insights and ideas. Try to put bad news with good news messages, but don’t lie and don’t ‘spin’ – you will loose their trust.
Other Rewards
Good performance does not mean you have to give pay increases. If the performance is due to a one off successful sale or project, providing a one off bonus to show your appreciation is an ideal way to demonstrate how much you value staff. It won’t add to the long term fixed financial commitments of the company, but will enable a set amount of money to be shared among employees.
Access to voluntary benefits is another way of showing staff that you are thinking of them, even in these stretched times. The employer usually pays a small amount per person and this enables the employees to access all sorts of discounts making their existing pay packet go a bit further. Choosing the right benefits programme is important, but it can be a very cost effective way of rewarding staff.
Time off
Providing staff with extra time off can be another cost effective way of rewarding them. This may not work for every business and certainly won’t work if you have a workforce who are too busy to take the annual leave they normally have, but for many extra time off goes a long way.

Getting reward right is hard at the best of times. Getting it right in the current economic climate is even harder.
What has your experience been with recent pay reviews? What alternative approaches have you adopted?

Total Reward

07 Jun
by Donna Obstfeld, posted in pay, Reward, Total Reward   |  No Comments

At a time when Companies are still struggling to provide pay increases for employees, what are the alternatives to ensure engagement and retention of talent within the business.

For many people, choosing an employer, going to work and performing at the highest possible standards is not just about how much they get paid. Pay is important, and certainly people need to feel they are earning a fair and sufficient wage, but increasingly it is the total reward package which is being taken into consideration.

When considering total reward, it is not only the typical transactional elements such as pay, bonus and pension which are taken into consideration, but the relational rewards such as the culture and ethos of the organisation, the learning and development opportunities available and the flexibility of work design i.e. the ability to work from home, work part time or work 10 days in 9.

Employees want to feel valued; they want to be recognised when they have done a good job rather than being scorned for something that has gone wrong. They appreciate and value access to new opportunities, but don’t want to feel they have been taken advantage of. Employees want to be able to contribute in a positive way and feel their opinions are valued and carefully considered when changes are being made.

As the economy starts to recover, employers need to recognise that the most attractive of their staff are the top talent and there is a risk of losing these people if they are not getting what they want and need from your organisation.

Every employee has different motivational drivers. It is vital that organisations understand what each individual needs and what the business must do to recognise, incentivise and reward each employee. Line managers have a vital role to play throughout the organisation. From recruitment to retention, line managers need to engage with their staff, understand their ability to contribute, empower them to do so and ensure that reward and recognition is appropriate.

For companies who need to compete for and retain top talent, creating a culture of Total Reward is essential to the long term success of the business.

Long Service Awards

10 Jun
by Donna Obstfeld, posted in HR, Human Resources, Long Service Awards, Reward   |  No Comments

Rewarding long service is tricky. You need to consider what you are rewarding, attendance or contribution? In the era of age discrimination, is rewarding long service, rewarding older members of staff and discriminating against younger members who are less likely to be receiving the awards.

What is the purpose of the award? Is it because you have always done it? Is it the right kind of motivation / thank you / incentive for a modern workplace?

I would suggest that gifts are not appreciated. The vase may be lovely, but the company logo and employee’s names and dates of service would probably put off the receiver from displaying it with a bunch of flowers in.

My recommendation is ditch the long service awards. Look at initiatives which recognise all staff for the positive contribution they make to the business: a big contract won; a major project completed on time and within budget; employee of the month as voted by colleagues or customers; outstanding customer satisfaction scores etc.

Align rewards and awards to your business goals and use them to improve employee contribution to the business.

For advice and support with your reward packages, call us on 01923 504100 or visit our website.

Salary Sacrifice: May no longer be attractive for employers

28 Apr
by Donna Obstfeld, posted in Benefits, HR Consultancy, Reward, Salary Sacrifice, Tax   |  No Comments

Personnel Today has reported that a European court ruling means employers may be forced to pay millions in unpaid VAT for salary sacrifice voucher schemes.

For a number of years now the Government have offered a number of schemes to encourage employers to provide employees with tax advantageous benefits. Some of the most common include: Child care vouchers, bikes for work, pension contributions and retail vouchers.

Employers use salary sacrifice as part of their total reward package for employees and it helps with attraction and retention of staff.

Today, it appears that employers may now be liable for up to four years worth of VAT on the value of retail vouchers.

Does your company offer vouchers under a salary sacrifice scheme?
What would it cost your business if you do become liable for four years worth of VAT on this value?
What would the impact be on your business?

At DOHR we work with employers to introduce cost effective benefits schemes which incentivise employees and save the company some money. We’ll be watching this space with interest.

To bonus or not to bonus?….. that is the question.

27 Apr
by Donna Obstfeld, posted in bonuses, HR, HR Consultancy, Incentives, pay, Reward   |  No Comments

With news that RBS are set to overhaul their bonus scheme, and the Lib Dems denouncing NHS managers pay, bonus payments for all staff are once again in the spotlight.

Companies who choose to use a bonus to incentivise performance should develop a robust and transparent scheme which encourages the particular behaviours the company values and achieves the results it needs to achieve before any payments are made.

Elements which employers should consider when developing a bonus scheme include:
~ Who to include in the scheme
~ Any differences in award levels
~ Behaviours to be encouraged
~ Bonus levels achievable
~ How to measure performance in an objective way
~ How the bonus scheme fits the corporate strategy and culture
~ How the bonus scheme fits with the company’s reward strategy
~ The views of various stakeholders

How many employers have got it wrong, hard to tell. I have seen situations where badly written bonus plans have wiped out the initial profits of the company! Not a good situation to be in!

Getting a bonus scheme right so that it incentivises and rewards the employee, while benefiting the business can be a combination of art and science. At DOHR we work closely with clients to implement, cost effective, engaging bonus schemes which add real value to the business.

Reward Strategy – Has your business got one?

14 May
by Donna Obstfeld, posted in Benefits, Business, Compensation, Human Resources, Reward   |  No Comments

29% of companies do not have a reward strategy (Personnel Management, 1 May 2008). Can this really be true? Do you know that l think it probably is. Companies spend anything from 10% to 90% of their turnover on their employees and have no plan for doing so, no idea if they are spending their money in the most cost effective way and no idea if the money spent on compensation and benefits is actually helping their business to succeed.

So what is a reward strategy and how can a company get one?

Like a business strategy, a reward strategy sets out what the business is aiming to achieve and how it intends to achieve it. In this case, the focus is on reward. How can we structure our pay so that it supports our business goals? Do we incentivise individuals or teams? Do we reward performance on an ongoing basis or just once a year with an annual bonus? Do the benefits we offer support our ethical beliefs and our company culture?

A reward strategy sets out the basis on which spend decisions are made. It provides a frame of reference and clear parameters which all transparent and communicated so that employees know what is expected of them and what they receive in return to thank them for the contribution they make to the success of the business.