I had a severe attack of reward management schizophrenia this week. UK HR and reward professionals need to make sure they are not creating the same uncomfortable situation in their own organisation.
At one of the large industry exhibition and conferences, on the one hand, speakers and stand sales staff were continuing, as in previous years, to extol the benefits of total rewards approaches and solutions, so employers can display to their should-be-grateful staff what a generous package they offer, and appeal to their financial, and especially non-financial, needs and motivations. ‘Total rewards’ has become almost a mantra, unthinkingly adopted, supposedly ‘market best practice’, copied by the vast majority of UK organisations, with their chocolate box image flex plans.
But how appropriate is it in the current economic climate?
Generally, fairly well-paid reward professionals should, on the other hand, read the latest findings from the monthly study which the Centre for Economics and Business Research conducts for retailer Asda. Ninety per cent of families believe they are poorer than 12 months ago. They are right.
When we were in genuine economic recession two years ago, the unusual situation of price deflation meant that many of us, even with pay freezes, were still experiencing increases in our real income. Now the situation is very different. While AonHewitt’s latest Salary Increase Survey found average wage rises of 3.2 per cent, retail price inflation in August was up to over 5 per cent.
So, the Asda survey found that the average family’s disposable income fell last month to £162, £14 lower than 12 months earlier. It is £1 lower than January 2007, yet prices have increased by a quarter since then. According to Andy Clarke, chief executive of Asda, “British families have never had it so tough”; or as Ed Miliband expressed it at the Labour Party conference “every day of your life seems a tough fight, to make ends meet, to do the best by your kids”.
I have been thinking for some time that the implicit boast of ‘total rewards’ doesn’t suit all organisations, notably one of the charities that I work with that had been through redundancies and pay freezes. Their employment offer is now phrased in more realistic and, perhaps, honest terms.
But more and more employers may be seeing the same situation: with large numbers of workers struggling to pay the bills and pay off their debts, they want to hear about their pay and how that might go up, and what’s going to happen to their pensions, rather than the less significant fripperies or flex plans. And employers need to adjust, to reframe their reward messages for their people accordingly.
“I don’t buy ‘total rewards’, we’re in it for the bonuses,” a financial services sector adviser growled to me this week. For very different reasons, if they are not careful, more and more employers may be finding that many of their people react similarly negatively to their expensively communicated total rewards schemes.
Duncan Brown, Principal, Aon HewittImage may be NSFW.
Clik here to view.
At one of the large industry exhibition and conferences, on the one hand, speakers and stand sales staff were continuing, as in previous years, to extol the benefits of total rewards approaches and solutions, so employers can display to their should-be-grateful staff what a generous package they offer, and appeal to their financial, and especially non-financial, needs and motivations. ‘Total rewards’ has become almost a mantra, unthinkingly adopted, supposedly ‘market best practice’, copied by the vast majority of UK organisations, with their chocolate box image flex plans.
But how appropriate is it in the current economic climate?
Generally, fairly well-paid reward professionals should, on the other hand, read the latest findings from the monthly study which the Centre for Economics and Business Research conducts for retailer Asda. Ninety per cent of families believe they are poorer than 12 months ago. They are right.
When we were in genuine economic recession two years ago, the unusual situation of price deflation meant that many of us, even with pay freezes, were still experiencing increases in our real income. Now the situation is very different. While AonHewitt’s latest Salary Increase Survey found average wage rises of 3.2 per cent, retail price inflation in August was up to over 5 per cent.
So, the Asda survey found that the average family’s disposable income fell last month to £162, £14 lower than 12 months earlier. It is £1 lower than January 2007, yet prices have increased by a quarter since then. According to Andy Clarke, chief executive of Asda, “British families have never had it so tough”; or as Ed Miliband expressed it at the Labour Party conference “every day of your life seems a tough fight, to make ends meet, to do the best by your kids”.
I have been thinking for some time that the implicit boast of ‘total rewards’ doesn’t suit all organisations, notably one of the charities that I work with that had been through redundancies and pay freezes. Their employment offer is now phrased in more realistic and, perhaps, honest terms.
But more and more employers may be seeing the same situation: with large numbers of workers struggling to pay the bills and pay off their debts, they want to hear about their pay and how that might go up, and what’s going to happen to their pensions, rather than the less significant fripperies or flex plans. And employers need to adjust, to reframe their reward messages for their people accordingly.
“I don’t buy ‘total rewards’, we’re in it for the bonuses,” a financial services sector adviser growled to me this week. For very different reasons, if they are not careful, more and more employers may be finding that many of their people react similarly negatively to their expensively communicated total rewards schemes.
Duncan Brown, Principal, Aon HewittImage may be NSFW.
Clik here to view.
