Emerging from lockdown and the impact on reward

I have had several conversations with clients over the last few weeks who are either experiencing challenges recruiting and retaining or anticipating it to be an issue in the coming months, citing a new war for talent that has emerged post-pandemic. In some respects, it was inevitable that whilst some organisations thrived during lockdown, others were forced to cut costs and reimagine their business models to survive. Whether you are in the former or latter category, whatever your business model, the predictions at the start of the year are proving to be more pessimistic than the reality. Already we have seen the economy grow by a stronger-than-expected 2.1% in March, an increase in the Bank of England’s forecast for overall growth of 7.25% in 2021 and whilst pay freezes are still very evident for some organisations, the median pay award is currently at 2% according to IDR, ahead of where we thought the private sector might be this year. 

The job market is also picking up according to IES, with employee jobs increasing by 100,000 in April (the fastest growth since 2015), bringing employee numbers back to the levels of last summer. Vacancies in April were back close to pre-crisis levels and unemployment fell again to 4.8%. We have seen the reality of this in hospitality and retail with Dominos set to hire 5,000 workers due to staff shortages, as many recent hires who were available during lockdown now returning to previous roles. Other businesses are setting up referral schemes for staff (Hawksmoor are offering £2,000 for this) whilst others such as the Caravan restaurant brand are asking customers to recommend staff, and Mcdonalds franchises in the US offering free iPhone after six months service to attract new employees. 

An increase in the number of vacancies and changes to the way that we work means that people have more choice than ever – not just about whether they are looking for temporary or permanent roles, but also whether they are home or office-based. This means your employee value proposition is king and needs to be better than ever to attract and retain the talent you require to move your business forward into the future.

There is good will from those who felt they were recognised and treated fairly by their employer during pandemic but others, who are now feeling overworked, under-valued or simply disheartened by the way their leadership responded to the crisis, are prime candidates to leave. Having worked remotely for over a year, many people feel less connected to their team and organisation and are potentially up for a new challenge. 

So, what can you to do hold on to your staff and attract new ones? Let’s start with the obvious one – pay. The issue currently faced by HR and Reward professionals is ensuring that benchmarking data keeps pace with the market. Industry surveys tend to have a lag which means that for really hot skills, such as digital and eCommerce, they can’t quite keep up. Robust industry surveys however are always a good starting place, and for organisations who don’t benchmark annually, it is important that you age your data to ensure the comparison points you are using take into account that the market will have moved, potentially at different paces depending on the roles and the markets you are comparing to. Whilst recruitment data is generally too broad as it isn’t based on actual salaries, recruiters are useful sources of insight about general market trends for specific roles and you can overlay this onto benchmarking data to bring a more current view. The risk is however that you end up with knee jerk salary increases to keep staff or bring in new employees on significantly higher salaries than existing colleagues. Good pay governance here is key, ensuring that you monitor pay differentials, particularly for people doing the same job so that you don’t create gender or ethnicity pay gaps. Using digital tools like Paylab can really help you see pay practice both comparing salaries to peers and the market to ensure you don’t create pay situations that become future headaches to manage. 

Another consideration is looking to extend long term incentives to include key talent that you are keen to hang on to. The research shows that there is a bounce in terms of eligibility with a sense of status that comes from being included in such plans, however, the evidence also suggests that they need to have a reasonable chance of paying out and not be set to far into the future - we naturally discount the potential of future gains so giving the opportunity to get something in five years might not be the optimum way of keeping your stars. People want to be appreciated and recognised, and as well as showing you value their presence in your organisation for the long term, providing meaningful opportunities to grow and develop needs to sit alongside the promise of future cash. 

But it’s not all about the money – to attract and retain employees you need to make your total proposition irresistible. Talk to your employees about what they truly value and look to create a reward deal that is not only meaningful but talks to your values and who you are as an organisation. Many businesses have USP’s that they simply don’t shout about or become regarded as business as usual. Instead of just adding new shiny benefits because they are in trend, really consider your whole offer and think about what it is that you do that sets you apart. But most of all, talk about it! So many organisations have amazing benefits and opportunities for learning and development but don’t share it beyond induction. Your employees won’t remember everything that you offer if you don’t tell them. Old ways of communicating won’t work – with people at home, having posters in the office is no longer the best way to get across the various benefits you offer. Many organisations are moving to mobile enabled engagement platforms, such as Innecto’s Amplify, that not only helps employees access the benefits you provide in real time on their phones, but gives you the ability to send communications & push notifications, recognise employees and create a community voice that doesn’t have to be accessed from a desk.

Getting your position right on hybrid working is also key. Whilst true flexible working was previously a differentiator, on the face of it, many organisations have now embraced hybrid working and are more open to different ways of working. However, as we settle into the new normal, there is a risk that there is an expectation of people returning to the office as before the pandemic, and unless clarified contractually and through policy guidance, organisations can end up with blurred lines and loss of talent who thought they had access to one thing when another was the true reality. Organisations that embrace new ways of working and have very clear policies and practices about the application ensuring a fair and consistent approach will win out over those who aren’t truly in it for the long haul.