In my last blog, I wrote about the findings from recent CIPD research about employee pay attitudes and expectations and the impact of this on consumer confidence. It looks like that confidence in the immediate future will be weak as the rate of inflation outstrips pay increases. While the story of the past couple of years has been around pay freezes, it will probably shift to the number of below inflationary pay increases, until RPI starts to fall significantly.
However, as I said previously, while there is a lot of attention given to the outcomes of pay decisions, little focus has been given to how pay increases are determined in the first place, despite the significant sums of money involved. To help fill this gap and to assist HR and reward professionals review their existing pay processes and make them easier/less painful the CIPD (ie me and Janet Egan) has carried out research in this area and produced a free guide for members.
Get the pay review wrong and you may find that that you are operating at a loss, or that you find it difficult to recruit and retain the talent you need, or are sending out the wrong messages about the behaviours, performances and skills the organisation values and is rewarding. However, get the pay review right and it can create value for the organisation. That said, you don’t often get recognised for getting the process right whereas if you get it wrong you’ll soon know about!
The overarching message from our research is that while HR may be responsible for the pay review process, it is a key business process that has the power to make or break an organisation and both management (including line management) and HR needs to recognise this. As well as aligned to the business, the review should also be integrated with other HR processes as culture and values, learning and development, performance management and talent, etc so each supports the other.
On the more technical side planning for the review should start well in advance of pay review implementation dates, with a specific liaison between HR and finance, as well as collecting relevant salary, business and economic data. Being prepared should also help you to ensure that other critical reward or HR initiatives aren’t crowded out by the pay review process.
Once the review has been completed, resist such temptations as to run away or change jobs, but review the process to see what can be done better as well as taking on board the implications of any changes required by corporate governance and regulators. Also, look ahead to the future to see how the changes in the economic, political or social environment may lead to changes in the way that your organisation operates and what the implications are for the pay review, will they be rewarding the right things?
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