NorthgateArinso consultants have worked with over 150 local authorities and universities developing new pay structures, undertaking equality impact assessments and equal pay audits and using their expertise to advise on the development of innovative approaches to pay and reward.
In this article one of our Senior Reward Consultants, Andrew Worth, discusses some of the common questions about pay modelling in public sector organisations.
What should employers consider when designing a new pay structure?
The design of a pay structure is a key driver in communicating and delivering a reward strategy. Pay modelling and developing new pay structures is not purely a technical exercise based on the outcomes of a JE project, but is also an opportunity to develop a wider pay and reward strategy that has a positive impact and supports culture change, effects organisational design and assists in clearly defining career paths based on an equitable approach.
Is pay modelling just part of a job evaluation project?
No. Many councils and public sector employers have used pay modelling for the first time in response to job evaluation. However, the development of pay and reward strategies to improve recruitment and retention and introduce more flexible benefits also creates a need for pay modelling. Pay modelling is not just about creating a new grading structure following a job evaluation exercise but should also be used to evaluate changes in terms and conditions, support future equality audits and cost out proposed organisational changes and proposed national pay deals.
How long will it take?
Organisational job evaluation projects can take many years to get the final rank order and there may be an expectation that a solution can be found within a short time frame. Obtaining accurate pay data and combining JE results plays a key role in being able to model new structures effectively. Once the data is available a large number of scenarios can be modelled. Direction from senior management and awareness of constraints are critical to enable successful design and negotiation of a new structure. Small organisations of less than 1000 employees can expect to take 1 to 2 months to develop and recommend a structure. Larger organisations will take longer due to the diversity of the workforce.
What to model - Basic Pay or Total Cash?
Where a number of pay elements exist across various functions within an organisation, harmonisation and/or consolidation of these is critical to meet equal value requirements and ensure transparency in the overall pay arrangements. The effort taken to gain the information on these pay elements can ensure all pay arrangements are addressed in one change.
Employees work for organisations for a number of reasons. Communicating the total value and cost of an employee to an organisation is a key reward tool to ensure employees have an understanding of the value placed upon them. This can include ensuring employees are aware of their basic and total cash package, pension scheme, annual leave, sickness, flexible working and training and development policies. However, the need to develop more flexible benefits should not be restricted to an annual benefits statement. Many organisations are now adopting a flexible benefits approach enabling employees to choose lifestyle benefits according to their circumstances. Used in conjunction with a clear communication strategy a total reward approach can have a significant impact on retention of employees.
Find out more about Andrew: http://solutions.northgatearinso.co.uk/andrew_worth