Low inflation forces firms to be creative with reward packages

Low
inflation is creating a pay management headache for many employers, according
to consultants.

Watson
Wyatt said that as the low-inflation environment continues, employers are
looking to find innovative ways of managing employee pay rises in conditions where
absolute pay rises are small and the ability of employers to realign pay scales
is severely limited.

"Employers
are facing a number of difficult issues," said Carole Hathaway, a partner
at Watson Wyatt.

"One
of the most significant is how they justify the allocation of HR, line
management and employee time and emotional energy in assessing individual
performance to deliver relatively small increases in pay and insignificant
differences in pay between satisfactory and star performers."

"Continuing
with the old ways of managing pay is no longer effective," said Hathaway.

"However,
there is no universal panacea. Each employer must carefully assess its specific
people strategy and capabilities to determine which new approach will most
successfully align with its HR and total reward policies and processes to
deliver the business strategy.”

By Quentin Reade

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