rebaLINK: keeping a grip on pay data
A comment on a recent rebaLINK post – our members-only online forum –was submitted highlighting how quickly market pay data is becoming outdated, and asking what others are doing to mitigate the impact.
“Increasingly, some market pay midpoints are looking really out of touch with the ‘real’ market. It feels like 2021/early 2022 data from providers has been made even more quickly redundant by a painful blend of unleashing of projects post-Covid, the material inflation and other economic pressures, and the 'employee-led' candidate market.
"What are people doing to try to maintain discipline in market pay midpoints while keeping the wheels on for recruitment/retention? Using ageing? Expanding ranges? More flex with going over existing ranges?”
As you would expect, a range of responses were received to this challenging topic. With several respondents indicating that they are using wider ranges and are ageing their data. Some are also looking to take additional measures, such as awarding one-off payments, for certain markets, job functions and disciplines.
Yet, among the answers were also words of caution, which underlined the fact that market data will always be out of date. It was argued that the current fluctuations come down to a greater focus on pay due to market conditions, inflation and, following the pandemic, an increased desire to move roles.
“We run the risk of inflating compensation and then having to manage this in the long run. Our ranges are wide to accommodate multiple challenges, but one option is to look at different ways of retaining employees. Could retention payments be an option, or sign on bonus' instead of driving high salaries that cannot be sustained? We age our ranges year on year and where necessary apply a premium if we are really struggling, but also conscious about peer impact of existing employees.”
It is a concern that others voiced, with worries about creating large disparities between internal colleagues and new hires for the same role. However, pay decisions are clearly coming under pressure, particularly for those operating in sectors where there are skills shortages, with some respondents indicating that salaries for these roles are moving above max pay ranges.
There are also indications that more off-cycle increases are being awarded as competition for skills increases and retention figures decrease.
Indeed, another rebaLINK post asked what salary benchmark data others are using, as they felt that the normal annual update was not sufficient given the pace at which the pay landscape is changing.
And it is not just pay levels that employers are having to consider. Many are also debating awarding a cost of living payment to help employees – indeed there have been many press announcements about such payments from the likes of Rolls Royce, Lloyds and Easyjet.
Although none of those responding to the query on rebaLINK about cost of living payments said they had made one, many were considering it and had also taken steps to support employees in other ways.
“We will be implementing the following: promotion of our money saving benefits (e.g. retail discounts, health cash plan, cycle to work scheme, etc), re-introducing season ticket loan, financial wellbeing seminars, promotion of EAP service. And we’re also considering: a one-off payment to help with rising cost of living and mid-year annual pay increase. We’re reviewing all options and no decision made on these as yet.”
Other respondents also said they planned to provide additional financial wellbeing support specifically aimed at helping employees to manage the rising cost of living, while considerations about budgets for 2023 for upcoming compensation planning were also being made.
It is clear that reward professionals are facing a perfect storm of external and internal pressures on pay, and many of the decisions being taken will be based on the circumstances of individual organisations and workforces.
Overall, the message is clear, increasing pay is not necessarily the answer to the cost of living crisis, and reward professionals must consider all avenues before making snap pay decisions.
REBA's professional members can access rebaLINK to join the conversation. If you haven't yet joined, but are keen to get involved in this online network for senior reward and benefits professionals, you can apply for complimentary membership.