PERFORMANCE MANAGEMENT

Pay transparency: because they're worth it

It’s hard to escape talk of pay when it’s so often reported on in the press. Over the past few weeks, the subject of reward and who gets what has been widely discussed. Take the BBC and their 18% gender pay gap, or the call by Lord Adonis to cut fat cat pay amongst university vice-chancellors, it’s all been analysed. This week brings further debate with the announcement that big corporations are going to have to start disclosing top and median pay within their organisations.

The ratio between the CEO and your average Joe worker is clearly a talking point and it raises eyebrows first and questions later. Whilst the High Pay Commission reckons the new rules that come into force next summer are a big deal, the TUC and others believe the whole move towards greater transparency has been watered down.

Pay has always been a controversial topic. There’s no getting away from the fact that what people earn around you is going to produce some level of emotion. As Brits, we’ve never been good at being open about what we get paid. It’s not polite to ask and rarely do people volunteer the information. This is not necessarily the case in other countries, but it’s something we struggle with here.

As co-author of this year’s CIPD Reward Survey (due for publication in October), we’re in the middle of putting the finishing touches to our own report on reward management. Without divulging the findings, the study has thrown up some interesting questions around pay transparency and I’ll be sharing these with you later in the year.

In broad terms though, we want pay to be fair. Cast your mind back to Scientific Management Theory and the great Frederick Taylor himself talked of “getting a fair day’s pay for a fair day’s work”. In the early 1900s and beyond, Taylorism came to define the notion that people should be paid for what they do. But it’s hard to quantify that in today’s knowledge-based economy and understand how ‘market value’ translates into your pay cheque.

Fairness and equity around pay – or at least perceptions of it – are good for business. No organisation wants to be condemned for paying poorly at the bottom and too generously at the top. Sports Direct is a good example of how it can go wrong. Indeed, many companies now brand themselves as 'living wage employers' and for some adopting these new policies has been an expensive but necessary challenge – particularly for small businesses.

"Ultimately, what a successful pay strategy comes down to, is whether people feel they are getting what they deserve. Businesses do fall on tough times and it’s hard to compete if you’re a small fish surrounded by killer whales. That magic money tree can be rather elusive. However, there is a compelling argument for just being honest and transparent."

So how do you set pay? There are a range of factors that play a part in determining what someone is worth in monetary terms. At its heart, a good reward strategy should consider how it incentivises a team and motivates them to perform to their best. After all, it’s hard to argue against rewarding good performance. However, a number of organisations I have been involved with are now reviewing the link between performance and pay. This is largely because it’s become harder and more complex to demonstrate – in an age of transparency - how decisions are made. The performance review has been the ‘go to’ tool for establishing pay progression for many years. But this relies heavily on line managers getting it right and managing performance effectively. It also relies on an objective assessment of someone’s input and value to the business – which in anyone’s view can be subjective – despite the use of job evaluations. Value is very much in the eye of the beholder!

There have been calls to abandon the appraisal and its link to pay, but an alternative to assessing performance and therefore setting pay, doesn’t seem that visible or apparent. Quite often, a lot of tinkering around the edges takes place in order to improve performance reviews and make them fit for purpose. But carrying out an annual appraisal still forms a key part of a line manager’s role and it looks like it will continue to do so for some time to come.

Market rates also play a role in setting the pay strategy. Although this can often be exaggerated and line managers would do well to remember that ‘the market’ is itself a social construct. Of course, firms need to examine what competitors are paying, but the ‘going rate’ is often used as a bargaining chip when a recruit negotiates their way into a business – particularly at a senior level. Clearly, we live in an age where the talent pool is ever changing and in some cases, ever depleting. A recent article by Larry Elliott predicts a hollowing out of the job market as artificial intelligence takes hold. Coupled with the impact of Brexit and the potential loss of lower waged labour, the skills employers are looking will come at a price if firms are to attract and retain key individuals. Nevertheless, it’s a bit lame to rely solely on the old ‘market dictates’ argument, when setting pay. Conversely, when you ask firms where they position themselves, rarely do they admit to paying in the lower quartile – even though the laws of distribution mean that twenty five per cent should be there!

Irrespective of the market, an organisation must be able to afford their staff costs. Ability to pay is still an overriding factor when it comes to determining what someone gets, but this should be viewed in the round. If pay is low, high staff turnover can be expensive and cause reputational damage. It can also hamper performance and dilute your cultural values if you’re constantly losing people to your competitors.

The use of non-financial reward measures or total reward packages can often be implemented to help ease the strain on burgeoning pay budgets. The public sector have had to adopt more innovative means for rewarding employees, as the one per cent pay cap creates an obstacle for attracting talent. By offering a range of non-financial benefits that staff can pick from to enhance their own lifestyle choices, organisations can use thesestrategies to help retain employees. Flexible working, help with childcare costs, time off for good behaviour, can all help bolster performance.

But don’t be fooled that these are equal alternatives to a decent pay packet. I have often witnessed employees bemoan their lack of take home pay and heard line managers defend their policies by reminding staff that the Christmas party was on the house. Or that all expenses paid trip to Reykjavik was part of the deal. Jaunts and freebies will only get you so far. Some staff members have commitments – the family day at Legoland was good fun, but it won’t pay the mortgage.

Ultimately, what a successful pay strategy comes down to, is whether people feel they are getting what they deserve. Businesses do fall on tough times and it’s hard to compete if you’re a small fish surrounded by killer whales. That magic money tree can be rather elusive. However, there is a compelling argument for just being honest and transparent.

Explaining how pay decisions are arrived at is key. Discussing with employees how they can progress through the pay bands or hit the necessary targets to qualify for a bonus, is also important. People can be turned off very quickly if they feel they are being manipulated. Myths and stories may emanate out of lies and half-truths, but they spread quickly and set the tone. Be open and myths quickly lose momentum.

In summary, pay transparency is quickly gathering pace. Recent political and economic events have demonstrated a need for greater openness and clarity across organisations. If transparency is embraced correctly - rather than reluctantly - it could help strengthen reward strategies.

"Ultimately, what a successful pay strategy comes down to, is whether people feel they are getting what they deserve. Businesses do fall on tough times and it’s hard to compete if you’re a small fish surrounded by killer whales. That magic money tree can be rather elusive. However, there is a compelling argument for just being honest and transparent."

Talent & Recruitment

Perfect CVs don't necessarily make perfect employees

This year’s A level results were published last week, resulting in the inevitable flurry of activity across Britain’s universities, as students accepted undergraduate places or weaved their way through the maze that is clearing.

Some students may have decided not to go to university at all, opting instead to find a job or maybe an apprenticeship. Others may be lucky enough to still afford a gap year, where I’m told you "find yourself" after ten pints of beer whilst recreating scenes from Leonardo DiCaprio’s The Beach in Thailand. And no, I’m not bitter I never had the pleasure of joining in. Honest.

But the prospect of new adventures and all that lies ahead got me thinking about how – as individuals - we all approach that perilous journey along our career paths and how – as employers – we respond.

The job market is an ongoing challenge at any stage of life, not just for those about to start out on the road, but how we present ourselves on paper is often our first foray into the recruitment world. Call it a resume, call it a CV, call it what you like – it represents your life story and is a measure of what you have achieved for others to be impressed by or to scrutinise. In today’s age, social media has amplified its use. An online profile is now the property of everyone who has internet access.

For many, the CV is a simple history of jobs past and present. It shows commitment, dedication, experience, knowledge and ability. It shows us at our very best. But an increasing number of people don’t necessarily possess those steady career histories – they don’t fit ‘the mould’ – so what happens then? Is it game over?

"By taking a more innovative approach to candidate selection, companies are able to develop unique competencies that stand them out from the crowd and ultimately boost business, making the need to review talent recruitment strategies an economic – as well as a moral – imperative."

These questions are ones I grappled with on a personal level, earlier in the year. Having taken time out to reflect upon my own pathway, I spoke with a number of colleagues in the field. One resourcing manager told me to "ditch the doctorate" if I wanted to progress down a commercial route. My jaw hit the floor, but it also reaffirmed my gut instinct.

Those who know me will be aware that I have a PhD and my career to date has been a blend of academic and commercial HR roles. I am what some refer to as a 'prac-academic' - and no, I didn’t invent the term. The manager explained that I was perceived by senior managers as "socially awkward" (I’m still talking about my degree here, not my personality). A Masters degree demonstrates educational robustness - but anything higher and it does you no favours at all.

Now, I must point out that not everyone agreed with this piece of advice. However, I can’t deny that the whole "nutty professor" stereotype doesn’t contain a kernel of truth (sorry, profs) and in any scenario it’s hard to shrug off preconceived views of who you are in whatever sector or role you’re trying to move into.

A friend of mine who has recently endured a brief spell of unemployment is also seeking a new role. She is deliberating whether to iron out periods of absence, in a quest to find work. In her defence, she claims employers can no longer handle the reality of the gig economy and flexible labour market. A bit of embellishment goes a long way . In a post-truth age is it now fair game to smooth out the cracks or withhold information, just to be in with a chance?

A report by the online careers service, Glassdoor, crowned "What on your CV is the closest thing to a lie?" as the toughest interview question of 2016, posed by software company, The Phoenix Partnership. Perhaps evidence that we’re all desperate to tell the perfect story and build a convincing narrative.

It’s easy to see the realities of the labour economy in play. Zero hours contracts, portfolio careers, timeout for family, even mental heath issues. They all combine to make for a not so perfect CV. But as HR professionals and line managers, do we still expect to recruit those who demonstrate solid and safe career paths? Or are we being a little bit hypocritical, demanding the benefits of a more flexible workforce on the one hand, but unprepared to take on what – or who – it throws back at us as a result?

There is of course good reason for seeking out not so perfect candidates. Those familiar with Barney’s resource-based view will know that, when it comes to beating a competitor, playing to your employee’s differences can be a firm’s biggest strength. Moreover, that every employee should be cut from the same tried and tested cloth, flies in the face of HR’s call to build diverse and inclusive workplaces.

In Jayne-Anne Gadhia’s autobiography The Virgin Banker, the CEO of Virgin Money describes a point in the company’s start-up history when she asked some of her former Norwich Union (now Aviva) colleagues to leave their existing roles and join her. Norwich Union backed the Virgin project and so this wasn’t exactly poaching. She recalls how the HR Director was unimpressed by her choice of recruits, telling her they weren’t right for the roles. Reflecting on the business later, Gadhia realised that the people she’d taken were perceived to be the ‘troublemakers’ by HR. However, within the nonconformist, ‘can-do’ attitude of Virgin, these employees had become rising stars. They had realised their potential and made Virgin Money a success.

Let’s be honest, recruiting is not an easy task. There is always a risk associated with giving anyone an opportunity to shine, but perfect CVs don't necessarily make perfect employees. As HR experts, we need to encourage managers to think more laterally when it comes to finding their next team member. We need to question the status quo and look beyond job titles and certificates. Diverse workplaces are not just about gender or race, they are about experiences and skills. By taking a more innovative approach to candidate selection, companies are able to develop unique competencies that stand them out from the crowd and ultimately boost business, making the need to review talent strategies an economic – as well as a moral – imperative.

So next time you’re looking for someone new, maybe that person who decided to take that gap year and retrained as a Hawaiian hula dancer just might be the one!

"By taking a more innovative approach to candidate selection, companies are able to develop unique competencies that stand them out from the crowd and ultimately boost business, making the need to review talent recruitment strategies an economic – as well as a moral – imperative."

Management & Leadership

Do we still undervalue soft skills in leadership?

So I’m going to come clean. I’m a woman and I prefer people rather than things. There, I’ve said it! Feels good actually.

But I should probably be ashamed. For starters, I’m clearly doomed to failure when it comes to my career. Secondly, I completely fall into the gender stereotype trap. In fact, it’s possible that women like me exist purely to reinforce statements made - both publicly and in private - like that of Google’s James Damore. In a ten page dossier he claimed that women are ‘biologically’ programmed not to succeed in the tech industry, stating that ‘women preferred people to things’ and that they are ‘more prone to neuroticism’ and therefore unlikely to hold down highly stressful jobs.

Now this (surprisingly) isn’t a feminist rant. It isn’t an article on gender either. The neurotic bit – well I’m just going to leave that there. But by publicly stating his position, what Damore has failed to recognise is how potent that heady mix of technical knowledge and management capability can really be. In short, he’s fallen - head first - into the perennial debate on what makes a great line manager and it’s on this issue that I wish to make my point.

Last week, I interviewed a senior reward expert from the finance sector and we discussed how there was a shift occurring within the industry in terms of skills value. Whilst many of the technical and analytical requirements of junior staff were still a starting point for careers in the sector, it was the people bit that was starting to take centre stage.

Previously, companies were promoting those with technical prowess into managerial roles and they were quickly climbing the greasy pole. Now there is a realisation amongst progressive organisations not to overlook the softer – more feminine – traits required to manage people more effectively. In short, emotional intelligence is now in greater demand and therefore those adept in social dialogue, team building and consultation are warranting a higher price tag.

"By critically reviewing job specifications and making soft skills count, it will save time and money, helping create a strong, high performing culture."

As an HR professional myself, it’s easy to see how a lack of attention to people skills can really cause senior management problems. Particularly in those industries that thrive on technical know how. Talented individuals with analytical expertise are often promoted into roles that don’t necessarily match their skills sets. It’s true you can invest in managers to develop their inner “softie” but it’s much easier if you can identify their potential from the start.

Get it wrong and the financial consequences for a business are significant. Not only does it disrupt efficiency and productivity, senior managers are often forced to take the time to address the issues created by poor people management. In one case I witnessed, an additional person was recruited into a team to work alongside the existing department manager. This was because they lacked the capability to manage a team. That doubled the firm’s labour cost in one go!

Had they looked more closely at the role before recruiting into it in the first place, they may have got the better candidate and a better mix of skill. By critically reviewing job specifications and making soft skills count, it will save time and money, helping create a high performing culture.

At managerial level, the range of competencies required to lead a team is complex and broad, so it’s great to hear that in one sector at least, there is growing emphasis on promoting those with the soft skills, rather than those that simply demonstrate high levels of technical excellence. After all, as a manager, you’re there to enable others to be great at the technical stuff. As a successful Chief Ops Officer from the oil and gas sector once said to me, “I’m a great people manager, but an average geologist. That’s great for being a COO.” In other words, they understood the business and the industry, but they recognised that in order to lead, they needed to be fantastic at managing people and not a technical wizard.

And here is where the gender argument falls down. Because the COO in question was male - therefore debunking the myth that soft skills are predominantly the domain of us girlies.

Anyone familiar with the terms ‘transactional’ and ‘transformational’ leadership will be aware that the latter is often aligned to what are deemed feminine traits. Even Hofstede – a pretty awe inspiring Dutch social psychologist – distinguished feminine from masculine traits in his seminal work on culture, back in the 1980s. He was pretty clear that it wasn’t just women that demonstrated a more feminine approach in the workplace – men did too.

There has been much discussion both in the academic space and popular media on the roles boys and girls are pre-conditioned towards. This article does little to illuminate these debates, but for me, it’s about ensuring that those soft skills or interests in people are not lost to things and objects.

Of course, there needs to be a balance. The tech sector would not survive without knowledge-based capabilities. Financial services would not flourish without analytical minds and there’d be a long queue at the petrol pump tonight, if engineers and geologists couldn't fathom out how to get the black stuff out of the ground. But to argue that those who possess a passion for people are not as likely to succeed and that it’s women who tend hold these traits, is short-sighted. In my view, you disregard the value of soft skills at your peril because experience has taught me employees leave line managers – and not organisations.

So, three cheers for the people lovers!

"By critically reviewing job specifications and making soft skills count, it will save time and money, helping create a strong, high performing culture."