If you are in the middle of your Annual Pay Review process or have just emerged from it, you could be hearing yourself saying ‘never again, it’s not going to be like that next year’. But before you know it, you are caught up in the business as usual activities and next year’s Annual Pay Review is fast approaching once again. Where did that year go? Ideally, you want to strike while the iron is hot; while the memory is still vivid and straightaway reflect and review on why that pay review was such a challenge.
There are two elements to this. The first is reflecting back, determining how to make next year’s Annual Pay Review process better. The second is to review whether you understand what your reward policies look like and if they are giving the business the desired effect. In part 1 of this blog, we will be looking at ‘reflecting back.’
In my experience, reflecting back is made simpler if you break down the process and challenge each element as a key component of the whole process:
1. Building a credible business case
- Did you build a picture of the external economic environment, gaining insight into the rate of inflation, cost of living and GDP? Was research carried out to understand pay movement and typical pay awards within your sector or location?
Doing this provides credible and relevant information for pay pot approval, but crucially it helps with building key messages for employee and line management communication.
2. Influencing the % Pay Pot needed
- Did you carry out effective financial analysis, modelling different options and scenarios before deciding on your pay review principles, demonstrating commercial understanding? Did you calculate any market adjustments or pay differentials for particular employee groups and did this require further investment?
Being clear on your reward stance and pay progression ideals, means you can ensure that any financial analysis is accurate and focused on the desired objectives.
3. The approval process
- Did you have time to prepare your business case in the format and with the level of information to engage the stakeholders? Were you clear on your implementation timescales and how they align with approval meetings, such as RemComms?
Understanding and anticipating the information key stakeholders need to make a decision and being able to quickly rework figures, means the business case will be credible and you will gain immediate agreement.
4. Communications – never too soon to start
- Did you start the communication programme early, pulling together a plan and identifying key messages? Did you anticipate questions, focusing on the types of challenges you might face with the pay review? Did you achieve a high-level of accuracy on the Pay Review letters and did they go out on time?
This activity stream is absolutely critical and takes time to put in place. Having a clear plan and drafting the communications early, such as pay review letters, Q&A’s and line management instructions/expectations, ensures that communication is accurate and timely and will support successful implementation.
5. Landing the Annual Pay Review
- Did you make it clear what your decision managers needed to do and by when? Did you make the process easy for them by providing guidelines? Did you make the process easy for you (HR) in terms of collecting data, aligning pay awards, managing the approval process and uploading data for the payroll run?
In my experience the whole project becomes condensed into this phase and becomes stressful. HR finds itself having to ‘make do and mend’ to get to the payroll cut off. With a slick internal process, having the tools to hand and clear & firm guidelines for managers this process is smoother.
6. Post-implementation – always room for improvement
- Did you have any issues or problems that you didn’t expect? Did you plan a wash up meeting with HR to ensure continuous improvements?
Whilst the Annual Pay Review process will never be without challenges and problems, it is importantthat these are minimised, reducing the impact on HR and employees. As with any large project, a project review is an extremely important and beneficial process.
If like me you feel that pay review really doesn't have to be this painful, I hope you've found this blog useful and taken away plenty of ideas and areas to challenge and reflect on. Look out for Part 2 of this blog, giving you ideas on reviewing and challenging your approach to pay and reward.
