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PPMA Annual Seminar 2014 - Reward Solutions for the Future


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PPMA Annual Seminar 2014 - Reward Solutions for the Future

  1. 1. REWARD SOLUTIONS FOR THE FUTURE 9 May 2014 Daniel Hibbert
  2. 2. MERCER Contents Page Adapting reward to reflect the increasing complexity of public services 2 Using reward to support workforce transformation 6 The role of performance management and reward in engagement 9 Conclusions 14
  3. 3. Adapting reward to reflect the increasing complexity of public services 2
  4. 4. MERCER 3 Large delivery organisations Smaller commissioning organisations Jobs designed around professional groups Jobs designed around business needs Reward for job size Reward for contribution Unconnected with talent management Integrated with talent management Emphasis on equal pay compliance Achieving equal pay compliance alongside flexibility Each term and condition of employment dealt with in isolation An integrated “Total Reward” approach to all terms and conditions Complex and inflexible processes Pay decision making based on business needs, rather than process The changing public service landscape How reward needs to change as local government adapts Reward is central to the transformation journey
  5. 5. MERCER Alternative talent and reward models The characteristics of each model are summarised below Specialist skills need to be developed within the organisation and long-term loyalty is required Skills are readily available in the external market and long-term career opportunities within the organisation may be limited Long-term career opportunities are available for those who develop within a defined career path The job is flexible and broadly defined and the capabilities of the job holder are critical to the value created in the role Talent characteristics Incremental pay spine, with pay starting behind market and moving ahead of market with service A single rate of pay for the job, aligned with the external market A pay system that fits with the defined career path, supporting the development of the individual through that career path Pay is varied by reference to the capabilities of the individual Reward approach 4 1. Loyalty model 2. Market model 3. Career model 4. Dynamic model
  6. 6. MERCER How the dynamic model operates New operating models require more focus on individual capability 5 Minimum Salary High Performing – Non-Consolidated 50 55 60 65 70 Basesalary£'000 High Performing – Consolidated Developing Range Additional salary paid to consistently strong performers Paid to exceptional performers, and not consolidated into Base Salary Individuals who are still developing into their role will be paid in this range The Rate for the Job paid for the expected standard of performance  The illustration shows a Rate for the Job of £60,000. There is the potential to earn a further 15% of salary based on performance, of which 5% of salary may be consolidated into salary and the rest may be withdrawn if performance subsequently declines.  Below the Rate for the Job there is a developing range of around 10% of base salary.
  7. 7. Using reward to support workforce transformation 6
  8. 8. MERCER 7 How simplified job design can support transformation The benefits of improved job design  Simplified job design: - Supports with the shift from measuring job content (job evaluation) towards measuring individual capabilities and performance; – Enables future changes and restructurings to be carried out more efficiently through the use of generic job descriptions, including using a job catalogue; – Facilitates the process of transformation by enabling the move towards new employment contracts.  How changes to job design can support a transformation journey: Initial changes to reward to bring this into line with the needs of the organisation 1 New roles and new appointments made on the basis of the new job design and reward approach 2 Changes made to existing roles to fit with the new organisation in line with transformation 3 New simplified organisational design and reward structure in place 4
  9. 9. MERCER 8 How to link reward directly with transformation All employee “Gainsharing” plan March April March June On an annual basis the plan is set up to pay a target amount at the end of the performance year, subject to the achievement of a set of clear measurable Council-wide performance targets. Actual payment varies depending on achievement against target. Payment made based on an assessment of achievement of Council-wide targets following the end of the year, as agreed by a Remuneration Committee (or equivalent). Payment could also be subject to a minimum standard of individual performance. 1 2 3 Start of performance period End of performance period
  10. 10. The role of performance management and reward in engagement 9
  11. 11. MERCER EvaluationDevelopment Performance Evaluation People Development Differentiates performance 10 Provides coaching and support for personal development The performance management debate Purpose paradox: development versus evaluation 10 Good performance management achieves the right balance between people development and performance evaluation
  12. 12. MERCER 11 Performance management What should performance management do for you? Improve performance – Individuals and organisation Identify top talent – individuals and teams Help people succeed – individually and collectively Performance management should also be used to engage employees in:  Issues relating to organisational performance, and  How each individual contributes to that performance.
  13. 13. MERCER Mercer research - 2013 Management capability has the biggest impact on overall success? 12 Mercer 2013 Global Performance Management Survey Report Copyright © 2013.
  14. 14. MERCER 13 Using performance management and reward in engagement What is needed to engage employees and enhance performance? Clear objectives and expectations Regular dialogue on actual performance and on progress made Reward Training and development Performance measurement Career discussions Integrated performance management, reward and engagement model
  15. 15. Conclusions 14
  16. 16. MERCER Making changes to reward and performance management Components of the business case for change 15 Benefits/savings Risks  A workforce engaged with the performance agenda  Stronger long-term talent management and career development  Reduced future costs, moving away from the “one size fits all” approach  Increased capacity to recruit and retain high performing staff  An enabler for transformation supporting change and flexibility  Adverse employee relations impact  Costs of transition, including use of resources and relating to pay protection
  17. 17. MERCER 16 Questions for discussion 1. Which of the four talent models are most suitable for your workforce? 2. Should the same talent model be applied across the workforce? 3. Is there the capability to manage a different type of reward and performance model? 4. How should the reward system be adapted to support the transformation journey? 5. Can performance management be used as a positive engagement tool? 6. How strong is the business case for making changes and should this be a priority?
  18. 18. MERCER 17 Questions and Discussion
  19. 19. MERCER Daniel Hibbert Principal Mercer Tower Place London, EC3R 5BU +44 (0) 20 7178 5520 +44 (0) 7557 031371 Contact details © 2014 Mercer LLC. All rights reserved. The information and data obtained through the report are for information purposes only and are not intended nor implied to be a substitute for professional advice. In no event will Mercer be liable to you or to any third party for any decision made or action taken in reliance of the results obtained through the use of the information and/or data contained or provided herein.
  20. 20. Mercer Limited is authorised and regulated by the Financial Conduct Authority Registered in England No. 984275 Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU 19