I wrote an article earlier this year that described what we mean by responsible reward, but to recap, responsible reward means considering the wider impact of how your organisation does business, and then aligning your reward package to this vision. The aim is to create long-term sustainability by moving beyond purely financial goals and incentivising your business – and your people – to generate a positive impact on society.  

At the heart of responsible reward is the fact that no business operates in isolation and we are all part of a global ecosystem, one that isn’t sustainable in the long term if we carry on consuming at the rate we do now. The UN has developed several initiatives, including their Sustainable Development Goals (SDGs), to protect the environment and people, and which demand a change in behaviour, and many organisations are using these to underpin their global strategies around responsible reward.

Take HSBC for example – aware of societal expectations and investor pressure to consider impact on people and the planet, it publishes an annual ESG report highlighting how it has aligned its values, conduct and business activity to the sustainable development goals and the progress it is making towards its ambitious targets. Focusing on six specific goals, including climate action and sustainable cities and communities, it is contributing towards them through its financing and investments, as well as how its conducts business and operate.

Goals into actions

But how do you translate these hugely strategic global goals into meaningful actions from a reward perspective? We can learn from companies such as Unilever here. Its Sustainable Living Plan has three big goals around improving health and wellbeing for more than one billion people, reducing environmental impact by half and enhancing the livelihoods for millions. Like HSBC, it links its aspirations directly to SDG’s, and it has broken these goals down further and set specific aspirations around them. One large part of this is its framework for fair compensation. As part of its responsible reward ambitions, this framework is underpinned by five principles: 

1. Fair and liveable compensation.
2. Market-based compensation.
3. No discrimination in compensation.
4. Performance-focused compensation providing alignment to our business.
5. Open and explainable compensation.

Each principle then outlines how it should deliver fair compensation by listing a number of standards to achieve. As a global organisation, it requires each country business to report its status against the standards of the Framework each year, and where appropriate, country reports must include a remediation plan to rectify any issues of concern as soon as possible. This way they can ensure that if any country is falling short of its principles, it can take swift action to put a plan in place to resolve the situation.

Global practicalities and responsible reward

So how does this work in practice when every country has its own different pay policies and practices? The key element here is around translating the global strategy into local application, but as Unilever has done, working with local partners and tracking updates on progress.

Take Unilever’s principle on a fair and liveable compensation: this is based on ensuring that every employee has enough money to provide for the basics as well as some discretionary income. Working closely with NGO’s such as Fair Wage Network, it has established minimum living wage thresholds for compensation in each of the countries it operates in. By monitoring the living wages of all employees globally it has succeeded in closing the living wage gap in most locations.

Fundamentally, responsible reward practices need to be linked directly to your strategic goals, and although consistency of application is critical, some practices may require the ability to apply local changes to reflect the cultural differences where necessary and ensure buy in. Being able to reflect the diversity and uniqueness of each country is key to engagement, and whilst sustainability may be the overarching goal, the application may be different; for example, from a benefits perspective, this might mean cycling to work in one country or car sharing in another. With HSBC, whilst it describes how operating in 66 countries means that when its employees volunteer they can have a truly global impact, its application of what ‘volunteering’ means will vary and take different forms.

In summary, the key to implementing your responsible reward goals lies in having clear links to your overarching vision, enabling local application where necessary and monitoring your progress. It goes without saying that ensuring employees understand what you are trying to achieve and how they can play their part is critical too. 

If you would like to discuss global reward strategies further, or any aspect of pay and reward, give us a call on 020 3457 0894 or email justine.woolf@innecto.com.

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