Preamble

Many reward professionals and their advisers are advocating a new post-Covid-19 agenda for reward strategy and practice. The lexicon includes, more compassion, empathy, justice, supported by existing re-inventions of equity, fairness, diversity, etc.

It’s great the professionals in the reward space are leading the way in developing new thinking in response to these unprecedented times. This article asks how well this thinking is likely to play with business leaders, for without such consideration the risk is little will change.

We hope this article will provide helpful reading for HR and reward professionals trying to sell internally new approaches and to challenge the way to influence the thinking of decision takers they are seeking to influence.

Relevant and recent history

Recent evidence shows that socially driven approaches to equal pay, gender pay, diversity, etc. have not progressed as desired and expected, even when economic benefits are demonstrated, often requiring government legislative intervention.

On a broader front, 20 Years of campaigning for Environmental and Social Governance (ESG) seems to show that business leaders have taken notice when their ability to tender for contract or through regulatory pressures are brought to bear.

Why have socially driven approaches not hit the spot?

Well, the Government as an employer has rarely taken a lead and business leaders are naturally conservative and anyway typically focus their attention on matters that impact more directly on (or protect) the bottom line - interests of shareholders - even if this might seem misguided.

Will the experience of Covid-19 give reward advisers any greater influence over attitudes towards reward reforms if they ignore business realities?

For us this is the missing piece.

Attitudes will only change if both the government and business leaders together see Covid-19 as a vehicle for positive change. What about the ‘workers’ that this new thinking is being aimed at?

Public servants

Lots of empathy for Doctors, Nurses, Teachers, etc., but will this endure after Covid-19?

The government’s recent publicity about big increases for their devoted public service workers was in fact simply the acceptance and implementation of the (pre-Covid-19) independent pay review bodies’ recommendations – applying only to those covered by review body recommendations – not a fundamental shift in public sector pay policy.

It has always been the case that the role of government as government, and government as employer, is in conflict – especially at difficult times in history – as now.

That’s not to say the government does not care – what it demonstrates is the government has to protect the economy as well as find the best ways to reward public servants – again, demonstrating the impact that ‘business realities’ and the bottom line has on reward.

What about employees in businesses?

Many business leaders hesitated at recent equality legislation, yet sucked it up – their actions provide something of a pointer to the future on Covid-19 matters.

Many health and care workers exist in the private sector – will their business leaders take a lead?

The key question is, does the experience of Covid-19 fundamentally change the evidence base for a change in normal pay relativities?

Change will in part come from what looks like a fundamental rethink of what people do in their roles, how and indeed where they deliver it. This introduces great challenges for policy makers, business leaders and reward professionals.

For example, conventional ways of justifying pay differentials like job evaluation are still being proposed to underpin pay equality, yet how does that play in a world where people may not have a job description, work where and when they want and if they are subject to any measure it is likely to be simply through their output/contribution.

What might really be the way forward for reward professionals and their advisers?

What to think about?

First, we believe that reward advisors need to broaden their horizons to view the wider aspects of what business leaders are really concerned about. Clearly the most insightful business leaders will be touched by recent events and how it changes how they regard and treat their employees.  But they will not have loads of cash to throw about in making the employee experience a better one, so they will inevitably be thinking in terms of business impact and, in particular, how to rethink the world of work.

Fresh areas of influence may lie in presenting new principles and practice of reward in the context of new business realties, for example:

• How the business needs to see its reputational risk if its practices do not align with not just employees, but customer, supplier and wider community interests;
• This in itself suggests a rethink of organisations’ CSR positioning, which traditionally have had more emphasis on the corporate, rather than the social;
• Helping business leaders re-think the organisational model, i.e. the way work can be done differently and more effectively – what the role of technology is in connecting people more effectively – we have all learnt to do that by home working, so let’s think about taking that to a new level;
• If more is needed to recognise and reward the less well paid who may now be seen as more deserving, indeed valuable to the organisation, what of those in the middle management bulge – is there a case for streamlining the organisation – and will business leaders have seen any weaknesses in the contribution of middle managers relative to those lower in the pecking order? Generally, how contribution is measured could well be central to the future of reward for organisations.

Second, the specific reward agenda has to be considered with some sense of what’s fair and just, but it will also need to be cognisant of:

• As indicated above, traditional approaches to reward such as overly-analytical job evaluation hardly fit in with a world with less hierarchy and flexible, fast moving role design;
• Will business leaders be more prepared to ask their employees what really matters to them and how they can improve the employee experience – and be prepared to take action when required?
• A particular aspect of this is in broadening the wellbeing agenda to include financial wellbeing, particularly for employees who have been hit hardest as a result of the pandemic (e.g. those at risk of not being able to afford unforeseen or even current living expenses), especially important for those working at living wage levels;
• A step further would be to rethink the overall and compelling Employment Value Proposition – to worry less about the brand and company values and more about building trusting relationships, where there is real alignment between business needs and the valued contribution of employees to deliver it.

There will be more pressing issues – and these will vary by sector and the economic impact of recent events.

Reward professionals need to be more economic and business savvy – close to real-word issues and be more on the case of re-aligning business leaders’ aspirations with employees’ and wider

stakeholders’ needs and expectations.  This should not be about government and legislation – it’s about building openness, trust and a common dialogue that all in an organisation can sign up to.

Alan Hurst, Managing Director at QCG - August 2020