Edward Dimbylow reports from the annual Institute of Personnel Development
compensation forum
The wider availability of information on earnings will lead to an escalation
of pay demands, Nicki Demby of Arthur Andersen told the conference.
Giving her predictions on the future trends in pay and benefits, she said
the growing amount of data available over the Internet was making it easier for
employees to find out what the industry norm is for their job. "We could
have escalation purely brought about by the transparency of pay data," she
said.
Mainstream professionals will soon be comparing their pay rates in the same
way as footballers and company directors.
Demby drew a comparison with the publication of the Greenbury report on the
high levels of directors’ pay which was followed by a sharp increase in
directors’ salaries. One explanation for this is that the greater transparency
the report brought led those who felt underpaid compared with their peers to
seek a pay increase.
But she warned that many of the statistics currently being produced were
very raw and could not necessarily be relied on.
"I have a real problem with pay data today," she told delegates.
"HR professionals need to be much more critical of it.
"You need to be clear where it comes from and the relevance it has to
your people and the market you are operating in."
Demby added that the UK was no longer an isolated island market. She pointed
out that of the top 30 companies in the UK, over half had a US citizen on the
board.
But she warned against the assumption that the US pay the highest rate.
"They do not necessarily pay them more – they just pay them
differently," she said.
Pay and reward for generation X
Nicki Demby warned delegates that they should consider adopting new methods
for rewarding 18 to 34-year-olds to maintain commitment and energy.
Performance related rewards should be tied to particular projects rather
than delayed to the end of the financial year.
But Demby said it would be wrong to assume generation X is solely motivated
by money – an equally big driver can be opportunities to try new things and to
receive training.
Feedback is important but should not be wrapped up in flannel.
Save and share letdown
Setting up a save and share scheme for employees could have a negative
affect on motivation and loyalty if your company has a volatile share price,
Terry O’Neill, European HR director of software implementation company
Cambridge Technology, warned delegates. In a contribution to a session on
international share schemes he said the price of stock can plummet in the time
it takes an employee to sell a share allocation.
This raises the possibility that employees’ expectations of profit will not
be met. "It could have the opposite of the desired effect to increase
motivation," he said.
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More to broadbanding
The hierarchical and narrow graded pay structures typical of the 1970s and
1980s are being replaced by broadbanded pay schemes, according to research by
the IPD. Organisations are using broadbanding – which typically means there are
fewer than six pay bands – as a basis for planning career development processes
instead of just a means of delivering pay. The study warned communication with
staff through workshops and focus groups is vital to making new systems work.
