As the public sector strives to achieve “more with less,” Jabbar Sardar looks at how rewards packages can be revamped to attract and retain the right blend of talent
Any thawing of the recent pay freeze in the public sector is likely to be slow, but that doesn’t mean the way it manages reward needs to follow suit.
There is no shortage of stimuli to review our approach to reward management in the public sector, whether as a response to the rising cost of providing such as pensions or to drive efficiency by linking rewards with performance. The desired effect must deliver an attractive total reward offer that is valued by current and prospective employees.
It is not just about economics. A reward strategy can contribute to an organisation’s culture and values, making it an employer of choice. So what elements of reward should HR professionals in the public sector focus on?
The Chartered Institute of Personnel and Development’s Reward Management 2012 survey reported that 77% of public-sector respondents had a base pay structure consisting of pay spines. Across other sectors, the predominant structure reported by respondents for base pay was individual rates/ranges or spot salaries.
Traditional public-sector rewards and benefits are generally offered on a “one size fits all” basis. As the 2012 Hay Group report Setting the scene for public sector reward – why and how sets out, such an approach has its merits: it is a simple and efficient means to demonstrate a non-discriminatory approach. However, the “one size” on offer can be neither sufficiently appealing nor adequate to meet the diverse needs that current and future employees may have.
The challenge is to create total reward packages that are valued by staff at both a collective and an individual level. They should contribute to employee engagement while remaining cost-effective. They should be part of an overall workforce strategy designed to drive improvement in performance and service delivery.
Length of service
Incentivising long service remains a key feature of pay structures in the public sector, with nearly three-quarters of employers basing eligibility for pay progression, to some degree, on length of service. Conventional public-sector wisdom is that longevity has a positive effect on organisational performance, and thus retention is a priority.
The segment of a labour market most attracted to a ‘traditional’ public-sector reward package might also tend to be attracted to a ‘traditional’ style of working.”
But given that other sectors do not reward length of service in the same way, it is probably fair to question its value. Is it a reasonable assertion that the segment of a labour market most attracted to a “traditional” public-sector reward package might also tend to be attracted to a “traditional” style of working, with a low appetite for risk and a low tolerance for change?
Not that a traditional style of working is always negative – it can bring many benefits and we have seen the pitfalls of too great an appetite for risk in the financial sector. But the most successful organisations are those with a workforce that has the right mix in attitude towards risk, innovation, flexibility, resilience and change. So what can the public sector do to make sure it provides reward packages that attract and retain a workforce the blend of attitudes needed to deliver our objectives?
There is potential for public-sector employers to offer more choice and flexibility by tailoring their benefits packages while retaining tight control on costs. This is something we are currently exploring at the Children and Family Court Advisory and Support Service (Cafcass), with our aim being to deliver a relevant and high-quality total reward package for our staff, which will help to make us an employer of choice.
Clearly, we need to retain pay structures that are transparent, underpin equality and that help us to retain staff. But it may be time to tip the balance toward performance and contribution in our structures, while factors such as length of service become less of a major issue.
Flexibility for the individual
Looking wider than pay structures, there is some argument for not only broadening the range of benefits available but also looking at the flexibility with which the traditional core benefits are delivered.
For example, generous annual leave is great – but what if an employee would prefer different rewards more aligned to their own circumstances? Consider that the reward offer may not be equally appealing to all employees. Similarly, the same package may not be as attractive for the same employee from one year to the next.
When planning against tight budgets, there will be concerns that flexible benefits might also result in flexible costs, or that the system of flexible benefits might become unwieldy or difficult to administrate. However, with careful design and high-quality IT systems, neither of these considerations need be an obstacle.
The challenge for public-sector employers is to implement a package that is cost-neutral, but increases the perceived value of the total rewards on offer and enhances feelings of engagement and worth among employees. What would your employees want if they could help design your new reward package? It’s worth asking them – their feedback could be very beneficial.
Benchmark your reward offering against other organisations by taking part in our 2013 survey on Benefits and Allowances. Participants receive a free report from the research as well as other incentives.