On 21st January the post-survey event for the QCG Remuneration Committee Survey for Agencies and Public Bodies took place. This event provided a space for survey participants to network and discuss topical issues, as well as exploring key findings from the survey.

This document provides an overview of key discussion points on the day.

The financial impact of COVID-19 on base pay

Survey data analyses indicated that estimated pay increases for 2021 have decreased by 1.75% and 1.25% for Management Board and CEO levels respectively. Unsurprisingly, event attendees highlighted the reasoning for this being the financial impact and uncertainty of COVID-19.

Attendees discussed balancing competitive pressures for Executive pay with financial factors calling for greater restraint. There was agreement about the most effective leaders of an organisation understanding the financial difficulties (and scrutiny) arising from COVID-19 and therefore not expecting a pay increase – or declining them altogether.

There is no expectation that such arrangements will lead to retention issues in the future as Executives are, again, not expecting a pay award in 2021 due to the moral imperative they have. However, there was noise around a more positive outlook for pay awards in 2022 – COVID depending.

Overall, the reduced/no pay award for Executives has come as no surprise to organisations and the expectation is that they will lead their employees through these difficult times whilst putting the organisation’s needs first. 

This all means that Remuneration Committees considering pay increases and/or other financial awards will need to have a very strong and clear rationale to support their decision, given the increased level of scrutiny and potential reputational impact of such decisions in the current climate.

Pensions - DB to DC

Whilst survey data analyses indicated there has been little change to pension contributions for CEO and Management Board levels (75% of organisations indicated there have been no changes to pensions in the past year), event attendees discussed the shift from Defined Benefit schemes to more modest Defined Contribution schemes for new employees.

The shift in schemes is nothing new - however with natural organisational turnover, the divide in pension schemes within executive teams – and the impact on total reward packages - has become more apparent, and attendees discussed the difficulty of balancing the two schemes.  

One method proposed for managing the different pension schemes is to take a total reward package view to promote a fairer, more consistent approach. For example, reducing the base pay, benefits or bonus potential for employees who benefit from a more lucrative Defined Benefit pension scheme.

Alternatively, some organisations simply ‘red circle’ those who still benefit from the legacy Defined Benefit pension scheme, and manage through natural attrition.

Employee Value Proposition

56% of organisations have focused on their Employee Value Proposition (EVP) in the past year and 63% plan to focus on this in the next year. However, the focus tends to be more from the lens of employees below Executive Director level and it has not yet made the RemCo agenda specifically relating to senior leaders.

There were a number of reasons proposed by attendees as to why there is a more explicit focus on the EVP, e.g. a shift in the organisation’s role brought about by technology, wanting to retain a strong organisational brand in light of an impending move to a new site, and a shift away from focusing solely on reward.

Attendees highlighted that the agenda behind developing a strong EVP was predominantly for recruitment purposes.

Organisations discussed developing their EVP by looking at:

Working conditions

COVID-19 has forced many to work from home and tackle new challenges such as home schooling and long term remote working. Therefore, organisations have been encouraged to take a more pragmatic view of such working conditions.

Attendees acknowledged that whilst more flexible working (in terms of hours and location) works for some employees, it is not necessarily the case across the organisation. Therefore, whilst more agile work is likely to remain in place following the easing of lockdown rules, employees will benefit from the flexibility to choose how they work – whether that be in the office 9-5 every day or working from home with more flexible hours.

Reward

With tight pay constraints as a result of the financial pressures of COVID-19, some organisations are looking to emphasise a total reward view when recruiting.

This entails highlighting the benefit of pensions, holiday, perks etc. – not just the base pay figure.

The job itself

With technological advancements, some organisations have found their type of work has shifted, requiring more technical and data driven individuals.

This has resulted in organisations changing their employer brand by creating a compelling narrative to communicate effectively when recruiting in order to attract candidates from the right talent pools.

For additional information about QCG or the survey please contact Alan Hurst on ku/oc/gcq//nala