From fair pay through to clear career paths and inclusive benefits to meet employee expectations

With the Bank of England predicting a broadly flat line for GDP in 2024, business conditions are likely to remain tough for the foreseeable future. The good news is that inflation is down. The cost-of-living squeeze is becoming a little more bearable as shoots of actual growth start to sprout in pay. The truth is, however, that by the end of 2024 most workers will have less purchasing power than they did in 2006, as their real wages will fall behind their expenses.

Let’s not say that too loud as there’s no quick fix just yet. For many companies, salary budgets will continue to be squeezed as they seek to balance talent retention, worker protection and cost management. So the pressure remains, and there is one thing that can help keep the cap on the pressure valve better than most, a strong culture.

Whether operating an elite sports team, a corporate giant or a regional manufacturing SME, the fundamentals of workplace culture are built on mutual trust. When leaders and managers demonstrate trust in workers, they feel more empowered, happier in their roles and more productive. When we trust our leaders and believe what they are telling us, it becomes easier to buy into a workplace culture.

Pay Transparency

While building a culture that works for everyone is far-reaching, much of it comes back to the bread and butter of pay, and how it is managed. We know from numerous studies and our own lived experiences that pay secrecy enables disparity. While some countries like Sweden and Norway have made salaries public for many years, the rest of the world is only now contemplating its readiness for the same kind of transparency.

In the UK, the Equality Act started a cycle of change in 2010 and in 2017 Gender Pay Gap regulations came into force aiming to further address gender pay disparity. Further from home, the EU Pay Transparency directive has brought in better information sharing around roles and ranges and in the US various states have adopted new legislation encouraging greater openness, particularly at the recruitment stage. This general global trend, and the advent of numerous pay-sharing platforms, has forced many companies to look at this more seriously.

Another telling factor driving greater urgency and affecting all businesses is the younger generation. LinkedIn market research has found that 34% of workers aged 25 and under would be happy to share details of their pay, compared with just 4% of workers in their late 50s. That is a significant difference in mindset. A study by Visier found that 68% of employees would switch employers for greater transparency, even if pay was the same.

Readiness - embracing a transparent mindset

To build and retain a strong culture - one that helps companies attract and then retain the best talent - business leaders need to listen to these younger workers. When they listen, they will find that the priority isn’t to know other people’s pay, but rather to have clarity and transparency around how pay decisions are being made and communicated. This might be in relation to pay scales or progression, to regional pay or to working remotely versus office based. For many younger workers, fairness starts with a company being willing to engage around these tricky areas with openness and frankness.

So as businesses, how do we know the level of transparency that is best for us? This is the burning - and sometimes uncomfortable - question we are helping a lot of clients with. And it spurns further challenges: How far do we want to go with pay transparency? What does it mean to us? How ready are we to begin the process?

Four-Step Journey

With most of these clients we work through a four-step journey.

1. Uncovering the risk

Most concerns around transparency stem from not knowing or understanding the scale of risk we are exposed to. This means analysing our data; scrutinising job descriptions and methods for internal comparison; benchmarking ourselves against the market. Only by doing this (somewhat dry and laborious) work is it possible to understand our strengths and our weaknesses.

2. Taking control

Once we understand our risk factors, we can take control and redress any imbalances that inevitably happen over time, if left unchecked. This is about reinforcing policies and frameworks so we can explain and justify them when needed: How are we using pay ranges? How do we manage pay progression?

3. Building confidence

One of the biggest challenges in following through with pay transparency is managerial black spots. Seen by workers as the guardians of the decision-making process, managers all too often either don't understand pay policies or lack the skills and training to hold these conversations with any confidence. This can cause more confusion, undermine the process and tug away your culture. So we need to provide the right level of training and support here.

4. Sharing the story

We need to illustrate and visualise to communicate. Business tools like PayLab can help managers by giving clarity to them and the employee. It can make tricky calculations on the fly in display the results in the context of the market, performance, gender or ethnicity. With easy-to-read dashboards, a tool like PayLab enables understanding and communication around pay: how it works, what is realistic in terms of pay progression and how decisions are being reached.

Even if you are still some way from true pay transparency, these four steps demonstrate to your employees that you are taking it seriously, which can transform satisfaction and help embed your culture.

 

"Innecto’s tailor-made solution was exactly what we needed... Their unique offering gave us a richness of data and insight that we previously lacked. The system was quick and easy to put in place and the support from the Innecto consultants was excellent: PayLab is a great tool but what made it invaluable was the wrap-around consultancy support. The visual nature of PayLab has made it easy to use and has helped us quickly identify areas where we’re out of line with the market, allowing us to better target our reward strategy." Philip Vickers, HRD, Charles Tyrwhit

 

Redefining Career – a Personalised Journey

The very same principles apply to career paths. It is not always obvious to workers how to plot their progression through a company if there is no hierarchical pathway in place. We need to be open to new ways of personal and professional development, giving fresh opportunities for people to grow.

More than ever with the advance of technology, we need to think strategically about the types of skills our workforce needs now and will need in the future, and plan accordingly to bridge those gaps. This may mean incorporating more emphasis on skills and capabilities, and prioritising skills-based hiring ahead of non-vocational degrees and credentials, or a more granular focus on skills learned in previous jobs.

For bolder companies with a younger workforce this may even lead to a redefinition of ‘career’, adapting our HR processes. Is it time to replace the linear treadmill of earned progression with a modular approach? The notion of a career reimagined into a personalised series of experiences, tailored to the individual and geared towards how people Netflix and Amazon their way through life. With this new kind of creative thinking, we will open ourselves up to a broader talent marketplace, especially the younger generation.

Big Data and Workforce Segmentation

Much of the groundwork here is in being prepared for change, and then shifting mindsets towards a more modern approach. The old one-size-fits-all model no longer supports a meaningful employee experience. We need to co-create initiatives with them to meet individual needs, boost engagement and improve retention. 

Central to moving forward with this is a more comprehensive data set and – throwing a little further forward – employing artificial intelligence (AI). AI has the potential to significantly disrupt the way we work and take us well outside our comfort zones. It will fundamentally change daily operations and enable more engaging and customised experiences for employees across recruitment, induction, training and personal and professional development. It will allow them not only to learn and understand but also to visualize new skills and roles. But we are not quite there yet.

The secret to humanising the workplace and individualising reward now lies in a more sophisticated approach to segmentation. Currently we use surveys, performance reviews, onboarding sessions and exit interviews to compile data. We can use received wisdom to model by age, career stage, marital or familial status, income, aspiration or a combination of these factors. Segmenting by age, for example, the typical employee in their 20s and early 30s may have an open mind to improving skills and competencies and prioritise a cycle-to-work scheme or flexi holidays over their pension. From mid-30s to 50, as mortgages and children come into the picture, workers may wish to hone a speciality or skillset while their approach to benefits shifts towards security, EAP and protection products. Closer to retirement, while the daily focus may shift to mentoring and knowledge transfer, interest in benefits will veer more to pensions, health and financial planning services.

But how can we go further? With so much access to our employees, how can it be that Amazon and Netflix know our people better than we do? We need to ask better, more contextualised questions with a view to improving retention. In the same way that retailers collect information to tailor and curate the consumer experience, we can be smarter, and use the data we have at our fingertips.

Benefits 2.0

The same logic applies to benefits. Whether we are purchasing a company cash plan for health cover, offering an insurance product, creating salary sacrifice schemes promoting healthier choices or sign-posting our workers to the support offered by an EAP, knowing our workers will drive us to make better choices on their behalf.

Once distinct groups of employees have been established – by whatever metric – we can then shape our benefits around them and curate the offering to maximise engagement. Then in time, by building even more granular personality profiles – perhaps with the use of AI – it should be possible to go beyond age or gender and account for different lifestyles and value sets even within the same cohort. Any danger of pigeon-holing people could truly become a thing of the past.

By using digital HR platforms we can also drive greater engagement through convergence. The HAPI App, for example, hosts benefits and discount vouchers alongside payslips and holiday allowances, cutting the need for separate portals. It houses health benefit paperwork but also gives access to online GPs, counselling and other EAP services, which mean less reliance on the doctor. In short, HAPI enables workers to access reams of paper, rooms of filing cabinets and streets of professional advice in a simple digital interface.

If we are to keep pace with the modern world and build cultures in which our people can thrive, our rewards and benefits must develop into company-enabled, employee-led propositions - configured, personalised and instantly accessible. If we work in this way, our people can feel like employees and partners subscribing to a box-set they never want to end.

 

"The Hapi App has been a big driver of attracting new talent. We now have a very attractive employee benefits offering thanks to Personal Group. Employees love having the Hapi app in their pocket and the fact that they can access all of the benefits outside of work." Amy Thomas, HR Administration and Systems Team Leader, Culina Group

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