The importance of outlining and communicating a fair pay structure to your workforce
The world of work and the relationship we have with our employer is also changing – there is no such thing as a ‘job for life’ any more, and most younger employees would not even have that in their conscious thoughts. Employees are generally more loyal to their profession than their employer and tend to move roles more frequently than ever before. That’s a really positive thing for our economy but it’s more of a challenge for companies. So how can we build that loyalty within the company and keep those talented employees that we don’t wish to lose?
One way is to look at how employees are rewarded and the options that can be offered to them in respect of their earnings. It’s important to think about what the earnings structure is like in your company and ask the following questions:
- Do you provide flexible benefits so employees can choose what’s best for them?
- Do you give a cash equivalent that the employee can choose to spend on benefits or take as cash?
- Do you provide bonus or commission?
- Are the benefits you offer dependent on job role or level within the company?
- Are there differences with employees that have come into the business through mergers or acquisitions?
- Do your employees know what’s available to them and do you and they understand them?
When we talk to employers, we often find that they have a wealth of options available in terms of the benefits they offer. However, many are not taken up to any significant extent and are often challenging for employees to find information about on the company intranet or benefits portal. Often the benefits offered have jargon and terminology that’s confusing for employees. Therefore, the question is how valuable are they to your employees in reality? For a lot of employees, it’s the bottom line take-home pay that’s important to them. They are often looking to maximise that as it’s what they see directly as a measure of their value.
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Total reward statements can be really beneficial in quantifying the value of wider benefits and are a good way of showing employees their net value to the company in a context they can understand. Providing an overview mechanism such as this can also help support employees wider financial planning, as they can easily see the benefits and options they have in one easy place, such as protection and wider savings availability.
If pay and reward are job role/seniority related, it’s important to share that openly with employees. Not only does this help them to see where they are on their career journey, but also to help motivate them if they wish to progress. It will also demonstrate that there is a fair and transparent policy for pay and recognition.
It is far more cost-effective to develop those already working within your organisation to move into higher roles than it is to have the expense involved with recruiting new joiners, and it’s also a great loyalty mechanism. LCP are a great example of this in practice, a high percentage of our colleagues started as graduates and have been here all their working life. That’s increasingly becoming a rarity in today’s landscape and is testament to supporting, growing and developing your talent and rewarding them appropriately.
Being open and transparent with reward and providing support for people to grow and develop is key both for the employee and for the company alike.
The author is Heidi Allan, senior financial wellbeing consultant at LCP.
This article is provided by LCP.
