Welcome back! You’ve finally shaken off the Christmas carb coma, so it’s time to crack on and make 2018 your best year yet.
While you’re still full of good intentions, here’s 5 ways to kickstart your Reward year. Over the next two weeks, we’ll be looking at short term challenges – tasks which have been on your to-do list for a while, but need to be done and dusted in the next few months.
Let’s start with some unfamiliar challenges for Reward this year:
Gender Pay
The April deadline looks a lot closer from this side of Christmas, and you should not underestimate the difficulty of gathering and processing the right data. There are also clear penalties for breaching the regulations by failing to report or reporting incorrectly.
Many of our clients have been caught unawares by the fact that relevant employee data is stored in different areas of their HR systems, and so takes time to find and collate. Furthermore, other companies have tripped up over the reporting calculations; for example, some employers have reported anomalous data or re-entered their information several times on the gov.uk site.
Incorrect reporting counts as a breach of the Gender Pay regulations and will be penalised accordingly. The Equality and Human Rights Commission recently clarified that although their first port of call will be to engage informally with companies in breach of regulations, it would not hesitate to use its full range of powers – including ‘unlimited’ fines and legal prosecution. (Source: FT)
In short: if you haven’t started yet, be afraid. Be very afraid.
A 3 point action plan:
- Do the analysis on both base and variable pay so you know what your actual gender pay gap is.
- Decide on the actions needed to address it and start thinking about your explanation to prospective and current employees.
- Bring in external experts now if you need them. (Hint hint…)
National Living Wage
From the 1st of April, workers over 25 must receive £7.83 an hour, which constitutes a pay increase of 4.4% for the UK’s low earners. If this affects your company, go back and make sure the pay increase is being applied across the board.
A 4.4% increase is quite a significant pay pot to find. For most companies that are making this adjustment each April, you will need to ensure that you are aware not only of the costs of this increase, but how it impacts the wider annual pay pot. By uplifting the lower salaries, the NLW narrows the differentials for the roles above. This causes an additional headache for employers of finding another pot of money to reward enhanced performance across the board.
Whilst for some companies this investment does feel like a burden, there are positive outcomes from the NLW. Higher pay results in higher morale and wellbeing, which should positively impact business results – and hopefully we’ll see a higher level of productivity and performance from NLW employees.
So while it is important that earnings reflect the rising cost of living, the NLW raise will still put pressure on employers’ payroll costs. Consider a review of job, work and organisational design to gain the additional performance and productivity that will pay for these higher employment costs.
First, look at your organisational design and challenge individual roles - does the role focus on the right tasks? Are those tasks high-impact? Do you have the right roles in the right levels? Are both sides clear on job expectations, and can you measure and assess performance? This provides a sense of purpose and direction to the employee, as well as boosting your bottom line.
Hopefully this has given you a useful starting point for 2018. Next week, we’ll be covering more familiar ground, with tips on performance management reviews, bonus reviews and pay reviews.
Innecto can help with any aspect of pay and reward. Call us on 020 3457 0894, fill out the contact form or email enquiries@innecto.com.
