Amid the Great Resignation and influx of Gen Z workers, HR leaders must have right structure if they are to attract talent
As the humble pay packet becomes less important in a world fuelled by employee perks, benefits and culture, what does it mean for business remuneration (REM) practices?
HR Consultant, Stephanie Love, told HRD: “Having a structured approach to REM is probably one of the most important things that an organisation can do right now.
“Number one is to have a structure, a framework to support pay decisions – that includes base pay and any incentives. And number two is have reliable and validated benchmarking data to verify what you’re going to pay for a particular role.”
The first thing businesses should do is audit their current REM practices, look at pay across the organisation and identify where there might be discrepancies. Then look at the vertical and horizontal structure of the organisation – so looking at the roles regardless of the individual in that role. “That’s where to start,” said Love.
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Love said that equal pay or pay equity was also a driving factor in employee engagement and retention. “If you’ve got two people doing the same role and one is being paid more, it can immediately disengage the employee being paid less and can be a driver for someone to leave an organisation,” warned Love.
Love said that pay equity was driving progressive organisations to be more transparent about how much money each role in their organisation is being paid. So, if rates of pay are going to be set in stone, what does that mean for the humble salary negotiation?
“There’s definitely still room for negotiation,” said Love who works with the motto ‘flexibility within a framework’. “It’s about fitting the guidelines to have a consistent approach to pay, but also allowing flexibility within that structure.” Love has employed this tactic since her first REM lead role because it allows the business to have a consistent approach to remuneration across the organisation but still allows freedom to empower managers to make decisions as well.
Love said organisations must start implementing progressive renumeration policies as soon as they can because the general workforce has just gone through a significant change in terms of their expectations of work, coupled with the current talent shortage, that it becomes very clear the power pendulum has swung well and truly in favour of the employee. This gives your talent the opportunity to shop around and do their due diligence on the companies that could be their future employer.
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“People are starting to look at their connection with the organisation, they’re not approaching employment from a place of just logic anymore, it’s also about how the feel about the organisation – is the organisation ethical, do they have ethical suppliers and practices, are they committed to climate change and reducing their carbon footprint, do they treat people equally, do they do equal pay audits,” explained Love.
Love said that Gen Zs entering the workforce are coming through with expectations never seen from entry-level employees. “They want more than just the basics you get from employment, it’s more about the whole employee experience. And they’re putting in really firm boundaries and holding organisations to their high expectations,” said Love.
“With the great resignation on the way and Gen z entering the workforce, if businesses don’t start looking at more progressive REM policies now, they’re not going to be able to attract and they’re not going to be able to achieve business goals,” said Love.