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How to provide adjustments without breaking existing pay structures





Posted by Emer Bucukoglu on 14 July 2022

Emer Bucukoglu

How to provide adjustments without breaking existing pay structures

Pay & Reward | Pay Structure | Pay Review | Reward | Pay Data | Cost of Living

Linkedin is an extremely powerful tool for engagement but it is creating new headaches for employers already struggling in a tricky market. 

With people working in hybrid roles, it’s become easy to sit in front of a PC, browse job alerts and interview for roles. There’s no need to ‘go to an interview’ and an employee may well be offered a job for more money. Equally, they might not be offered a job, but still carry the threat of leaving because the enticement is out there. So how can companies best manage these pressures?

Fundamentally, you should be guided by your pay structure, which doesn’t need to be a straight jacket, but it is important to mitigate any risks that can arise through making ad hoc decisions, bolt-ons or allowances that lose control of governing pay principles and create problems.

Often what a company can do will come down to the available budget and looking creatively at what they can offer beyond just pay.

Working with the budget you have

If making pay rises, always consider:

  • Legislative increases - ensure your structures have applied the legislative increase to the National Living Wage (NLW) and National Minimum Wage (NMW). 
  • Annual review - review your pay ranges each year and commit to a minimum uplift in line with inflation.
  • Focus on the lowest paid - guarantee a minimum base pay increase, especially for the lower-paid and strongest performers. You could also commit to offering the lowest-paid workers the greatest salary increases, bringing them up to the minimum of their existing pay ranges, subject to meeting performance objectives.

If you have people at the top of a pay band, or in different geographical areas, rather than pushing them beyond their band, get creative:

  • Cash is king - consider offering the award as a non-consolidated lump sum cash bonus, or offer some of the award as a non-consolidated bonus and the remaining as extra leave or pension top-up.
  • Play with weightings and caps - if you normally cap the amount of increase that can be applied in a single year, or are staggering pay rises over two or more years, consider increasing the cap or re-weighting the awards so more increase can be paid sooner.
  • Think geography - consider separate regional pay ranges but always conduct market research in support.

Working with an additional budget

If you do have some extra budget, think carefully about how you can squeeze the lemon dry:

  • Recognition schemes - in hard times increase funding for recognition schemes. Also consider increasing the maximum award or delegating increases to line managers, which can boost morale and retention.
  • Covid bonus - many companies are making a one-off bonus in recognition of hard times.
  • Give choice - look to increase the choice of rewards, for example increased employer pension contributions.
  • Benefits - explore other benefits for employees, for example letting partners and other dependants access comprehensive private medical care under a cash plan once a year.

Think strategically 

If you don’t have that extra budget available, think strategically about what the biggest pain points are for your organization when it comes to people walking out the door. If the market has shifted considerably there might be a justification for a salary uplift. If it hasn’t, how can you balance the short-term pain of losing and replacing key talent with the long-term effects of impacting the integrity of your pay structure?

  • Think role - apply a one-off salary uplift to certain roles or individual flight risks who are tough to replace, for example high performers likely to be poached.
  • Market supplement - if you are struggling to recruit within your existing pay structure, consider applying a short-term market supplement. If you do this, remember to review annually as the market changes and roles can lose their ‘premium’ status.
  • Ad hoc pay increases - these might be based on external benchmarking data but also need to be checked in relation to the market and the impact on internal equity.
  • Counter offers - you can make counter offers to employees who have been approached by competitors, but this can be risky if not audited properly. Always consider the long-term impact on internal equity.
  • Equity - if you can award equity beyond the typical senior levels, then do as well as setting up a share-save scheme.

Total Reward

Finally, and perhaps most powerfully, enhancing a worker’s overall package beyond their salary should allow you to keep your pay structure intact. Each employee will see these things through a different lens depending on their age, rank or other factors, so the broader the offering, the better: 

  • Scrutinise your existing benefits - try to see them through the eyes of your employees. Typical offerings include annual leave, health and welfare benefits, company cars and allowances, retirement benefits and voluntary benefits. Could you be more creative with the offering you already have, for example allowing employees to buy and sell holiday days or offer access to vouchers, tickets and events?
  • Career and self-development - are you able to offer more opportunity and support for professional development and career planning? Leadership and talent management programmes are important on an organisational level. On a more individual basis, helping an employee realise a personal goal might be easy for you but priceless for them.
  • Work-life balance - now more than ever with hybrid working, this is important. Examine your current policies and consider introducing a degree of flexible working, homeworking, or non-standard working hours.
  • Your work environment - make sure it is fit for purpose for the people in it, and also that you are embedding and displaying your organisational values

Depending on where you are in your journey and growth path, not all these ideas will apply. If you do have extra budget, it’s obviously worth thinking about how you can make that work as hard as possible, but at the moment it’s rare. The current cost of living crisis is dictating that cash is king, particularly for the lowest paid who will be fishing around, so if you don’t have any extra don’t rest on your laurels. Get creative and make Total Reward as relevant and enticing as possible. 

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