The 4Rs in 2014
Ingrid Waterfield, UK Head of Performance & Reward for KPMG Management Consulting, comments that the tone and meaning of business buzzwords reward, recognition, results and retirement are set to change in 2014
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ay freezes, frustration about the absence of bonuses and fears over job losses are all set to diminish during the next twelve months, as economic growth buoys confidence amongst employers and their employees. According to KPMG’s latest analysis of the UK workforce, the result will mean that 2014 is a year in which reward, recognition, results and retirement will dominate discussions between employers and their employees. But what will they be saying?
Continued pressure on business results means that pay will not be looked at in isolation. This year, the type of results organisations are striving towards centre around profitable growth, meaning that costs, including pay, will continue to be scrutinised heavily.
In recent years, economic conditions have meant that pay rises have been a rare luxury, rather than the norm. However, with the jobs market steadily improving, the next twelve months are likely to see greater rewards for hard working, productive, staff as employers try to hang on to their most talented people. The next twelve months are likely to be remembered as the year pay rises came back into fashion. Yet right now the trend we are seeing is less about blanket increases and much more of a tailored spend to those who are performing better, or where market forces are demanding higher salaries for certain roles. Pressure on results also means that total reward spend is being looked at far more holistically than ever before. There is far more focus on line managers and organisations as a whole making evidence based decisions on the return on investment (ROI). With this in mind, perhaps now is an ideal opportunity for
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organisations to take stock of what they provide to employees in their total reward package. For some this may be new, unchartered territory, but for those in a regulated environment, this is a situation deemed ‘have to have’, rather than ‘nice to have’.
...RECOGNITION FOR THE CONTRIBUTION THEY MAKE IN WAYS THAT GO BEYOND A MONTHLY PAYCHEQUE
This is why organisations should ensure they have effective ROI measures. Anything less and they risk failing to get the most from each pound of reward spent. The fact is that comprehensive data linked to other key people indicators are now vital if employers are to provide the most efficient and effective reward package to their staff. With the advent of big data we are seeing an increasing number of businesses gaining fantastic insights that just were not visible without the ability to bring together broader people data.
As a result they are genuinely tailoring their reward elements to suit both business and people requirements.
Using data to make evidence based decisions can also stop the common myth that throwing money at the problem will retain people. The chances are that an employee who plans to leave has already negotiated a package that their current employer simply cannot afford. The truth is that many employees increasingly
want recognition for the contribution they make in ways that go beyond a monthly paycheque. No one can argue that pay is unimportant, but for many, the fact their contribution is recognised and they feel valued is key. Recognition does not have to cost anything, and how much difference a simple ‘thank you’ can make should never be under-estimated. If you are paying some form of financial recognition, this rarely totals more than one per cent of the total pay bill and research shows that £1 of financial recognition in the form of vouchers, gifts etc is worth far more that £1 than bonus. For the employee, it is immediate, they choose it, and they feel valued as their contribution has been recognised.
Against a backdrop in which a new single tier state pension has been created, auto-enrolment has meant more people are saving for their future, and a new defined ambition pensions framework has been launched. KPMG’s analysis also suggests that, for many employees and employers, the year ahead will be one in which thoughts turn to retirement planning. Some may say it is just because the workforce is getting older, but with the introduction of a single tier pension, the abolition of contracting out from 2016 and a variety of new types of pension arrangements, companies will start to think about where retirement planning fits into workforce management. For many the question will be how to get the right balance between retaining key skills and facilitating retirements for employees at the end of their working life.
Successful organisations will be taking a step back and looking at the 4Rs together as failure to do so is likely to limit how they move forward in 2014.
PP
HRfocus
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