What rain can teach us about reward, by Charles Cotton

Yesterday, after work, I trudged back from the CIPD’s office Wimbledon in the rain. I got on the tube and when I got to home to Clapham I was surprised that that the pavements there were dry. It seemed odd that it could be raining in SW19, but 4.5 miles away in SW4 it was dry. 

Sometimes in reward there can also be an assumption that what goes on in our neck of the woods must, should or could be applicable elsewhere. This can lead to various reward initiatives such as broad banding, flexible benefits and performance-related pay being imported in to an organisation as a way of meeting a challenge or taking advantage of an opportunity. These then fail largely because they do not take into account the local conditions. 

Each organisation is in effect its own micro-climate, so when looking at reward we need to realise that it is one element of an overall system of interdependent and interactive parts. If you start doing something with one element then that will have an impact, to varying degrees, on the other parts of the system.

Total reward is one way of viewing the interdependencies in people management between and within the financial elements (such as base and variable pay and pensions) and non-financial elements (such as opportunities for learning and development, meaningful appraisal and being involved in change). However, while total reward is a well known concept I’m not sure that it has had much impact on how compensation and benefit professionals actually think about the consequence of their reward actions and reactions on the rest of the organisation. 

In my experience, compensation and benefit professionals tend to focus on their part of the total reward approach but leave the other parts to their colleagues. While focusing on your area of expertise can make sense, there is a danger that we do so at the expense of joining up the dots within HR. The other danger is that we can also fail to join the dots between HR and the other parts of the system that keep the organisation functioning effectively. By adopting a wider perspective we can see how various stakeholders view the organisation, how they interact and where and how value can be created. This is not just an issue for reward and HR. It is an important consideration for all professions within an organisation. 

My fear with the current debate about public sector pay is that attention is being focused on just one element of the bigger picture. What services do we want from our public sector, how can these be provided most effectively, who should do it, when and where, what systems need to be put in place, etc? These are the questions we need to be asking first, so that we can design and create the appropriate organisations to deliver those services. Instead, in my opinion, the focus is on public sector pay and this has crowded out all other thought with the result that reward has become the system rather than part of the system.