HR REWARD AND BENEFITS


businesses and public sector organisa- tions: the days of uncapped bonuses on the one hand and carriage clocks for long service on the other, are most probably consigned to history. But Richard Crouch, head of HR


and organisational development at Somerset County Council and vice president of the Public Sector People Managers’ Association (PPMA), be- lieves innovative HR is the key to stra- tegic success in the reward landscape of the future. He explains: “Different colleagues in


other organisations are doing different things. Some public sector organisations are still exploring performance-related pay and this is not something we are looking at. “But the time has come to be strategic and sophisticated on


reward, when cash is short and headcount is going down. As employers, we have to keep incentivising those we want to retain and this is a difficult path to tread. But the direction of travel is changing.” Crouch believes that while pay, bonus and pensions used to


be the key focus for employers when it came to reward, in- vesting in these methods now might not be the most strategic direction anyway. Increasing the pay bill might not be an op- tion for employers either – especially in the public sector. “There has been a process of change over the past two


years,” he explains. “This has led to a hardening of leadership, mirrored in both the public and private sectors. The balance has tipped too far now and it looks like we are set to be in austerity for the long haul. “We asked our staff what is important to them in terms of


reward. They were not interested in bonuses, performance- related pay, recognition and incentives or monetary tokens. They saw reward as being thanked personally and more


freedom to operate at work. This re- quires a back-to-basics psychological contract. “So, from my perspective on reward in the public sector, the challenge is one of branding and linking reward back to a psychological contract for employees – perhaps looking at re- ward as being through helping people in their communities,


rather than


money and prestige. “This is where HR is needed on


the board.” But given the financial element of


compensation, HR directors have been reluctant to approach finance departments with numbers and, as such, have perhaps had to take the back seat when devising reward strategy. But Nicky Dempsey, a partner in the compensation


consulting practice at auditors Deloitte, doesn’t under- estimate the advisory role HR directors can take in leading the direction of reward. “HR directors need to have a voice on reward,” she asserts.


“This is not optional. “There are two ways they can do this: either by acting as an


internal objective adviser to the CEO or the remuneration committee; or by acting as the ‘shop steward’


for


management. In my experience, the more successful position is as the adviser to the chief executive.” In larger organisations, there is often a different reward


and pay strategy for senior staff than for more junior roles. Dempsey believes that while HR should be an advisor on senior remuneration, for junior compensation the HRD needs to drive this. She adds: “If an HR director has cost constraints, every


A lot of value is given to reward,


Angela Wright/Westminster Business School


pound they are spending needs to be aligned with the overall talent strategy. They need to be aware of how much they are spending on reward, that they are rewarding for the right things and that they are communicating and creating the right conversations within the business. If a bonus scheme changes, the HR director is the one who must ensure this will have a positive effect on organisational performance.” Rather than a cost to the employer, reward can be the fuel


to drive forward people strategy, to motivate the workforce into growth,


but not a lot of money hrmagazine.co.uk


potentials and to incentivise innovation and performance. So, like a high-end company car, people strategy is being


fuelled by a reward strategy. The CEO is in the driving seat, but the HR director needs to be beside as navigator, poised, not just to observe the road ahead but further into the hori- zon, to predict any upcoming bumps and hazards. The CEO may be driving the organisation, but the HR director has the challenge of navigating the strategy. HR


HR Supplement September 2012 7 to attract passive talent and retain high


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