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Ethical approach to pay “gains momentum”

Predictions for a change in shape of the pay and reward landscape – with good news on the horizon for more employees due to the push in closing the gender gap. With gender pay reporting well underway and proposed measures to scrutinise executive salaries, the push to promote an ethical approach to rewarding staff is gaining momentum.
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Predictions for a change in shape of the pay and reward landscape – with good news on the horizon for more employees due to the push in closing the gender gap. Contributor Tim Kellett, director – Paydata.

With gender pay reporting well underway and proposed measures to scrutinise executive salaries, the push to promote an ethical approach to rewarding staff is gaining momentum.

Paydata director, Tim Kellett, said: “Monitoring who employers are focusing their reward on and what the drivers are – such as high performance, greatest contribution and the external and internal market – are key to an organisation’s ability to create equal opportunities for current and prospective employees. We predict that fair and transparent pay will dominate the framework for setting pay increases over the next 20 years.”

Over the last few years there has been a rise of out-of-cycle pay awards, which Paydata has highlighted as potentially undermining the mechanism of looking at pay reviews.

A third of companies have granted out-of-cycle pay increases, saying they stem from inflationary pressures and market pressures. Employers’ reluctance to officially grant an across-the-board 3 percent increase to match inflation has burdened some with the costlier option of negotiating pay awards to address market pressures affecting their employees. The cost of losing employees to better-paying competitors is another unwelcome result of a refusal to match inflation.

Out-of-cycle salary increases carry additional organisational costs of managing and administration, which risks escalating the true cost of pay awards to employers over the year. It says that this development of incremental tweaks is something to watch in the future.

Kellett continued: “49 percent of respondents to our UK Reward Management survey said that they had to offer new recruits up to 10 percent more than current incumbents, with 4 percent offering over 50 percent more. Workplaces already engage with up to six or seven generations of workers – including baby boomers who value benefits such as pensions and medical insurance, to millennials who are driven by values, purpose and making a difference.

Existing generations have 10 to 15 years in between them but next generations are being created in even shorter time frames of around five years. Each generation is characterised by different sets of values, bringing their own engagement challenges to the future workplace.”


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