An Approach to Total Reward

Peter Reilly, IES Lis McCormick, Camden

the institute for employment studies

The development of total reward

TR models research Business drivers Employee needs External pressures Action Plan Strategy

Positioning TR

Design

Delivery External benchmarks

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.) IESs 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

Total reward model - Towers Perrin

TRANSACTIONAL (TANGIBLE)

PAY/REWARD
base pay contribution pay

BENEFITS
pensions health care flexible benefits

recognition

LEARNING AND DEVELOPMENT

workplace learning training performance management career development

WORK ENVIRONMENT
core values leadership employee voice job/work design

RELATIONAL (INTANGIBLE)

COMMUNAL

INDIVIDUAL

shares/profit sharing

perks

Cabinet Office total reward

Perception of the value of work Challenges/ interest Achievement opportunities Appropriate freedom & autonomy Workload Quality of work relationships Quality of work Supportive environment Recognition of life cycle needs Flexible work & retirement options Security of income Social environment

Competitive pay & progression Good benefits Incentives for higher performance Recognition awards Fairness of reward

Tangible rewards

Work/life balance

Future growth opportunity

Learning & development beyond current role Career advancement opportunities Regular feedback on performance

Enabling environment

Inspiration/ values

Quality of leadership Public services values Promotion of diversity Reputation of the organisation Risk sharing Recognition of achievements Dialogue, consultation, communication

Physical environment Tools & equipment Training for current role Sound IT/ work processes Safety/ personal security

Hay Group

Another approach to total reward

Compelling future Vision/values Growth/success Positive brand Positive workplace People focus Leadership Collegiality Trust/recognition Involvement/openness

Individual growth Development/training Career enhancement

Total remuneration Base Variable Benefits

Adapted from Schuster and Zingheim, 2000

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

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. 2. 3. 4.

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

Delivery options on Total Reward

Focus/ Employees All Strategic Total rewards philosophy Tactical Leave buying/selling

Fully flexible packages

Different reward offer for different groups Focus on key groups, eg hipots

Total reward statements

Flexitime for administrative staff Childcare vouchers

Segments

In practice
Variable levels of Total Reward integration

Average (where 1 is not integrated and 5 is fully integrated)

4.08

3.74 2.62 2.6 2.55

Pay Learning and Development Work-life balance

Benefits Other non-financial rewards

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 employees 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 grades administrative/clerical professionals
young, new hires well established staff specific directorates
senior managers

Components of total reward: theory

Attractive organisation Vision/values Growth/success Positive brand Development Development/training Career enhancement Effective organisation People focus Leadership Collegiality Trust/recognition Involvement/openness Total remuneration Base Variable Benefits

Adapted from Schuster and Zingheim, 2000

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 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 wont change what we do; but
They give additional confidence around fitness for purpose
Theyll 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