Organisations should focus on fair rewards

2006

It is widely acknowledged that employee engagement and level of contribution depends on staff feeling that they are fairly rewarded for their skills, knowledge and contribution. So why do only four out of 10 organisations include fairness as an objective of their reward strategy?

According to a new book from Britain's Chartered Institute of Personnel and Development (CIPD), there is no right or wrong pay and benefit package. But since reward strategies play a key role in reflecting organisational culture, organisations need to tailor their reward strategy to their own particular business objectives.

Reward and diversity: making fair pay add up to business advantage, argues that aligning reward and diversity strategies is not only common sense but good business sense.

Dianah Worman, CIPD Diversity Adviser, said that equal pay audits can help organisations achieve central business targets if employers are smarter at using the data to find the underlying causes for unexplained gaps exposed by an analysis of pay figures.

But she warned that equal pay reviews alone do not make an organisation an equal pay or fair pay employer.

Employers should begin from the principal that all individuals should receive equal pay for equal work

"Employers should begin from the principal that all individuals, not just women compared with men, should receive equal pay for equal work. Equal pay reviews must therefore look beyond gender and explore other diversity dimensions. This will help employers spot circumstances where individuals are paid unfairly, for no justifiable reason.

"But employers should recognise that equal pay audits go beyond number crunching, massaging figures and complying with legislation. They are about using figures to expose flawed employment policies and practices so these can be reviewed to make sure the same problems don't occur again."

"It is in the self interest of employers to explore the underlying issues, such as poor diversity training, weak performance management systems and biased appraisal processes in order to create a culture based on fairness as this contributes to better business performance."

Charles Cotton, CIPD Reward Adviser, said that well-designed pay and benefit packages can attract people to an organisation, retain staff and motivate them.

"Research shows that a diverse workforce can compliment these benefits through increased productivity and performance, but managed badly, efforts to improve diversity can create conflict and tension in the workplace.

"Reward and diversity professionals need to work together to align the two strategies to achieve fair reward. They must make sure that pay and benefits are determined by the relevance against job-related criteria.

Yet because most jobs are subject to change, employers also need to track changes by reviewing job descriptions regularly.

This means monitoring the reward system using analytical job evaluation to determine where individuals are doing equal work, ensuring objectivity in all aspects of reward and communicating reward principles clearly to employees.

An organisation that recognises individual diversity should create a flexible reward package, Cotton added, not one be based on the 'one size fits all' theory.

"It is not going to matter how good the salaries and benefits are if companies then fail to manage employees in a fair manner," he said.