Pay progression can be managed in a variety of ways and each company and set of employees will bring a unique set of challenges. In looking to find the best way through pay progression it is important to assess the many different methods and practices available to companies in measuring employees and assessing their value to the business. Do you focus on skills and competency? Do you define by career pathway or continuous performance management? Is it more important to benchmark against changes to market rates of pay, or to factor in payment for a specific contribution or product development?

Affordability modelling

Regardless of the approach taken, companies need to consider affordability and the modelling of outcomes. Now more than ever, companies need to see a return on investment from pay increases, and with candidates still in a relatively strong position there is a trade-off between retaining staff and not allowing your salary pot to become unmanageable. Many companies are recognising that their pay structures are no longer fit for purpose, forcing them to find workarounds or struggling with a lack of flexibility to allow for that. Particularly in these times of high inflation, modelling affordability has become increasingly important to anticipate scenarios and recruit knowing the true cost.

The timing of pay review is also an important factor. Previously, changes to pay would be restricted to the annual pay review with out of cycle pay increases limited to exceptional circumstances. More commonly now, companies are also reviewing at a mid-year point because they recognise that the competitiveness of the labour market means an employee can no longer wait 12 months before a significant contribution is recognised and reflected. Linking the achievement to the reward in a timelier way can also have a far greater impact on how that pay award is appreciated.

Building EDI into frameworks

There is an increasing weight of support and significance being placed around equality, diversity and inclusion, and an overall sense of belonging – all of which are progressing from abstract concepts into quantifiable aspects of an Employee Value Proposition. This affects everything, from the conceptual building blocks to the language being used to build pay progression frameworks that represent the strengths and successes of all employees, including those who are neurodivergent or have a disability. For example, if communication is included as a competency, it should be allowed to take various forms – written, spoken, visual. Judging it by a simple measure (such as verbal communication) is likely to be more difficult - disadvantageous - for certain people.

Equally, performance management processes need to allow for employees who are neurodivergent or have disabilities to be able to evidence their contribution without feeling at a disadvantage. An over-emphasis on the more visible performance elements can risk some employees’ contributions not being seen and recognised.

Care should also be taken to ensure a pay framework cannot inadvertently favour presenteeism, or disadvantage part-time workers or those with responsibilities outside work, such as caring for a family member. Try to build enough flexibility to enable people with different levels of capacity, neurodivergence or disability to showcase their strengths. This means flexibility should also extend to where and when people work, and in how they attend meetings or conduct performance reviews. If an employee can achieve a more comfortable level of dialogue - and ultimately communicate better with their manager – by meeting virtually rather than in person, should that be possible?

Training and Support for Managers

In catering for this growing list of possibilities, training and support for line managers gains in importance. Strong decisions are only possible around pay progression and targeted pay awards when line managers are confident to make them or empowered to feed into them. Managers need to be comfortable understanding the needs of employees - and having conversations with them about those needs - without fear of saying the ‘wrong thing’. Training is crucial to this.

We also need to think about our managers when we create these competency frameworks that they will use. Sometimes it is difficult to narrow down a list of competencies, but assessing against too long a list is often impractical for managers, especially if they have a large team. Strike the right balance between rigour and practicality.

Targeted Pay

Finally, one approach becoming increasingly popular in the current climate is varying pay increases to target specific groups of employees. This may mean giving a higher increase or a one-off payment to more junior staff or to people at a certain level of pay. It might mean focusing on business-critical skills and significant flight risks whose loss would impact the business. In either case, using market data can inform our decisions around pay increases, stop companies overpaying and provide evidence of return on investment.

If you need help or advice from Innecto’s expert consultants around Pay Frameworks and Progression, please GET IN TOUCH >>

 

More from Cathryn Edmondson

Innovating with pay strategies – thinking outside the box when under inflationary pressure

How to use your reward strategy to support good performance

Top tips to build a recognition strategy for a hybrid workforce

How to effectively communicate recognition strategies

 

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