Many organisations have been hanging on, waiting for the tide to turn, but are starting to come to the conclusion that Canute was right – it’s impossible to control the waves. Here I re-visit top tips for managing reward in a recession, sadly they are worth dusting off for another look.
Undertaking an audit of the whole picture is recommended. While some company Total Reward packages may be like Milton Keynes - neatly planned and easy to navigate, most are like the City of London - a raggle-taggle collection of dead-ends and blind alleys which have evolved over the years. For employees, understanding the real value of what they are entitled to can be confusing and line managers sometimes offer little support.
So, what's your plan of action? You need to evaluate the whole package; how does it hang together?
1. Base pay – is it competitive, behind or ahead of the market? Do you know the current pay market position? If you have a tiny pay pot, are you spending it wisely?
2. Bonus payments – are they supporting the direction the company is going in? Is the amount they will pay out fair in the current climate? How does it relate to shareholder returns, competitors and effort?
3. Benefits – do employees value their package? Are there elements the company provides which are not of value to the employee? Can an expensive benefit be swapped for a cheaper-to-provide but popular alterative like working from home occasionally, or introducing flexible hours?
4. Create communications for employees which help them to see their overall package and its value – where there was a rag-bag of odds and ends, define and simplify the package so employees see its true worth.
5. Be brave – reward for performance. If you have a small pay pot to distribute, it will be more effective in the long term to give key performers a more meaningful rise than everyone a negligible amount. Key talent will be poached, even in a downturn, and hanging on to those who make the biggest difference in your organisation could be the difference between you all making it out of the water or not.
6. Focus on the key areas which are intrinsic to the organisation’s success - make sure the company’s strategic direction is reflected in the current organisation structure. So often organisation structure is a product of the past, not the future, and if the organisation is going to go through the pain of job cuts, let them be the right ones.
7. Be creative – all those flexible and part-time working requests – get them out of the drawer and see if people can be accommodated now, even if you can’t promise it forever. Offer unpaid sabbaticals, four day weeks and short days. Short-time working may be the answer to a prayer for some individuals.
8. Think about the psychological contract – the unsigned deal that we all make when at work. If you are open and honest and communicate well about the situation, show flexibility and respect, then the contract remains intact. If it becomes damaged, organisations run the risk of losing employee engagement and trust. Right now, you might not notice the hairline cracks, but when the upturn comes along, the ensuing fracture becomes a threat to employee stability.
9. Be radical. During the 1980s, Intel Corporation suffered major losses and a new product launch failed. It introduced what it called the 10% solution - employees took a 10% pay cut, and worked 10% harder. Out of this strategy came the Intel Pentium processor – one of the most successful products in the company’s history.
10. Finally, think the unthinkable – as the job market remains soft, there will be some very good people out there who may be more affordable. Consider this an opportunity to upgrade your workforce.
