the institute for employment studies

An Approach to Total Reward

Peter Reilly, IESLis McCormick, Camden

The development of total reward

External pressures

External benchmarks

Employeeneeds

Businessdrivers Positioning

TR

Action Plan• Strategy

• Design

• Delivery

TR modelsresearch

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

PAY/REWARD• base pay• contribution pay• shares/profit sharing• recognition

TRANSACTIONAL (TANGIBLE)

RELATIONAL (INTANGIBLE)

IND

IVID

UA

L

COM

MU

NALLEARNING AND

DEVELOPMENT• workplace learning• training• performance management• career development

WORK ENVIRONMENT• core values• leadership• employee voice• job/work design

Total reward model - Towers Perrin

BENEFITS• pensions• health care• perks• flexible benefits

Cabinet Office total reward

Quality of work Work/

lifebalance

Inspiration/

values

Tangiblerewards

Future growthopportunity

Enabling environme

nt

• Supportive environment• Recognition of life cycle needs• Flexible work & retirement

options• Security of income• Social environment

• Perception of the value of work

• Challenges/ interest• Achievement opportunities• Appropriate freedom &

autonomy• Workload• Quality of work relationships

• Quality of leadership• Public services values• Promotion of diversity• Reputation of the organisation• Risk sharing• Recognition of achievements• Dialogue, consultation,

communication

• Competitive pay & progression

• Good benefits• Incentives for higher

performance• Recognition awards• Fairness of reward

• Learning & development beyond current role

• Career advancement opportunities

• Regular feedback on performance

• Physical environment• Tools & equipment• Training for current role• Sound IT/ work processes• Safety/ personal security

Hay Group

Another approach to total reward

Adapted from Schuster and Zingheim, 2000

Compelling future

Vision/valuesGrowth/successPositive brand

Individual growthDevelopment/trainingCareer enhancement

Positive workplacePeople focusLeadershipCollegiality

Trust/recognition Involvement/

opennessTotal remuneration Base

VariableBenefits

Method: business drivers

Interview senior managersInterview with HR directorReview business strategy documents, including

●SWOT analysisLook 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 initiativesDesign - 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

Total rewards philosophy

Fully flexible packages

Leave buying/selling

Total reward statements

Different reward offer for different

groupsFocus on key

groups, eg hipots

Flexitime for administrative

staff

Childcare vouchers

Strategic Tactical

Focus/Employee

s

All

Segments

In practice…

4.08 3.742.62 2.6 2.55

Pay BenefitsLearning and Development Other non-financial rewardsWork-life balance

Average (where 1 is not integrated

and 5 is fully integrated)

Variable levels of Total Reward integration

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 fitInductive 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 CouncilEmbarking 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 gradesadministrative/clericalprofessionals

●young, new hires●well established staff●specific directorates

senior managers

Components of total reward: theory

Adapted from Schuster and Zingheim, 2000

Attractive organisation Vision/values

Growth/successPositive brand

Development Development/trainingCareer enhancement

Effective organisation

People focusLeadershipCollegiality

Trust/recognition Involvement/

opennessTotal remuneration Base

VariableBenefits

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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