An Approach to Total Reward

Peter Reilly, IES

Lis McCormick, Camden

the institute for employment studies

The development of total reward

External
TR models
pressures Action Plan
research
• Strategy

Business
drivers
Positioning • Design
TR
Employee
needs
• Delivery

External
benchmarks
Methods: external pressures

 Review the work environment in terms of:

● labour market
● changing demographics
● social/economic pressures
● cultural norms/expectations
● legislation/government imperatives

This should provide a context

within which the organisation operates. It affects
management thinking and employee perceptions
Method: models

Inputs to the research from:

● Management consultancies
(Hay, Towers, etc.)
● US consultants/commentators
(eg Schuster and Zingheim)
● Academic research
(eg Armstrong, etc.)
● IES’s own work
These offer a framework that allows you
to make sense of the data you gather and organise it
to give a meaningful results
The Las Vegas model
Total reward model - Towers Perrin
TRANSACTIONAL
(TANGIBLE)

PAY/REWARD BENEFITS
• base pay • pensions
• contribution pay • health care
• shares/profit sharing • perks

COMMUNAL
INDIVIDUAL

• recognition • flexible benefits

LEARNING AND DEVELOPMENT WORK ENVIRONMENT

• workplace learning • core values
• training • leadership
• performance management • employee voice
• career development • job/work design

RELATIONAL
(INTANGIBLE)
Cabinet Office total reward
• Competitive pay &
progression
• Good benefits
Tangible
• Incentives for higher
rewards
performance
• Recognition awards
• Fairness of reward
Future
growth
opportunity
• Learning & development beyond
current role
• Career advancement opportunities
• Regular feedback on performance
• Perception of the value of work
• Challenges/ interest
• Achievement opportunities
• Appropriate freedom & autonomy
• Workload
• Quality of work relationships
• Supportive environment
Quality of work • Recognition of life cycle needs
Work/life
• Flexible work & retirement
balance
options
• Security of income
• Social environment
• Quality of leadership
• Public services values
• Promotion of diversity
Inspiration • Reputation of the organisation
/
Enabling • Risk sharing
values
environment • Recognition of achievements
• Dialogue, consultation,
communication
• Physical environment
• Tools & equipment
• Training for current role
• Sound IT/ work processes Hay Group
• Safety/ personal security
Another approach to total reward

Compelling future Positive workplace

Vision/values People focus
Leadership
Growth/success
Collegiality
Positive brand Trust/recognition
Involvement/openness

Individual growth Total remuneration

Development/training Base
Career enhancement Variable
Benefits

Adapted from Schuster and Zingheim, 2000

Method: business drivers

 Interview senior managers

 Interview with HR director
 Review business strategy documents, including
● SWOT analysis
 Look at CAA/other audit reports

This should define what the organisation is seeking

from employees, and what part reward might play
Method: employee needs

 Conduct focus groups with a cross section

of employees by:
● grade
● length of service
● gender/ethnicity
● function/occupation
and/or
 Conduct an employee attitude survey
 Review results of previous surveys/reviews

The aim is to ascertain why staff join and stay,

what motivates/demotivates them at work,
looking at reward in the broadest sense
Method: benchmarking

 Take account of what other similar organisations

do regarding Total Reward
 Examine lessons from those regarded as strong
exemplars of Total Reward
 Consider general or specific messages about
recruitment, retention, motivation in the sector

Aim is to take account of good practice

and position this exercise
in the context of others’ experiences
Action Plan

 Strategy - link to other HR initiatives

 Design - establishing cost/benefit and risk
of change
 Delivery - especially communicating nature
of Total Reward and value to employees
Different foci

Total reward usually focuses on some

combination of:
1. The brand – developing an attractive value
proposition for attraction/retention
2. Understanding – ensuring employees realise
the full value of their reward package
3. Choice – delivering a degree of reward
personalisation believing that it is now required
4. Segmentation – determining what different groups
react to/are influenced by
 Delivery options on Total Reward
Focus/ Strategic Tactical
Employees Total rewards Leave buying/selling
philosophy
Fully flexible Total reward
All packages statements

Different reward Flexitime for

offer for different administrative staff
groups
Segments Focus on key groups, Childcare vouchers
eg hipots
In practice…

Variable levels of Total Reward integration

Average
(where 1 is not
integrated 4.08 3.74
and 5 is fully 2.62 2.6
integrated) 2.55

Pay Benefits
Learning and Development Other non-financial rewards
Work-life balance

CIPD Reward Survey

Broad methodological options

 Deductive approach
● take a model and see how well it applies
● use the management perspective and see
how well employees fit
 Inductive approach
● collect the views of staff and make sense of them
● interactively fit with a model
● see what gap there is between employee
and management position
The Camden Context

 Four-star, highly improving Council

 Embarking on a major project to modernise
reward structures
(Performance, Development & Reward Framework)
 Clear view of where we need to be in reward
terms as a business; less clear on our employee’s
views and aspirations
 Capital Ambition/IES research project
an ideal opportunity to ‘close the loop’
Approach used at Camden

 8 structured discussion groups, segmented to reflect:

● grade
● work pattern (FT/PT)
● length of service
● work activity
● gender

 simple questionnaire to complete

 employee total reward survey (online)
 re-analysis of recent general staff survey
Employee segments

Looked at the following groups:

 female service delivery staff, lower grades
 male service delivery staff, lower grades
 administrative/clerical
 professionals
● young, new hires
● well established staff
● specific directorates
 senior managers
Components of total reward: theory

Attractive organisation Effective organisation

Vision/values People focus
Leadership
Growth/success
Collegiality
Positive brand Trust/recognition
Involvement/openness

Development Total remuneration

Development/training Base
Career enhancement Variable
Benefits

Adapted from Schuster and Zingheim, 2000

Differences in reward perceptions
e.g. male v female service delivery
Attractive organisation
• Males more interested in
brand – proud to work for
council
• Females less attached to
brand
Development
• Males have greater ambitions
to develop
• Females may want
specific skills
Effective organisation
• Trust/fair treatment for both
• Males: Involvement & openness,
management capability
• Women: Work conditions
and good atmosphere
Total remuneration
• Pension important for both
• Flexitime more for important
men; pay a bit less so
Pilot results

 Describe an organisation we recognise overall:

● Pension well regarded – but not well understood!
● High levels of pride in job for those
in client-facing roles
● Narrow view of what constitutes ‘development’
 … but with one or two surprises:
● More satisfaction with pay than we expected
● Strong desire for development among
male service providers
Pilot outcomes
 We will ‘reverse check’ the pilot results
via our Employee Network
 Results provide an important justification for,
and verification of, our planned approach
 Results won’t change what we do; but
● They give additional confidence around
‘fitness for purpose’
● They’ll inform how we segment and package the
Performance, Development & Reward framework
● We will amend the emphasis in our communications
 … thank you

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