Re-establish total reward to address economic reality for UK employees

21 Jan 2019

UK employers risk appearing to ‘abdicate responsibility’ for reward management, and so encouraging increased government intervention to protect employees’ interests, according to a new IES paper.

Authored by Dr Duncan Brown, the paper suggests that ‘total reward’ offers commonly publicised by employers, and the recent recovery in average pay awards, do not reflect the economic reality experienced by the majority of UK employees.

The paper highlights growing insecurity and real-pay declines in the past decade for many in the UK workforce, as pay differentials have widened and gender, ethnicity and disability gaps remained widespread, prompting government intervention. These factors have, in turn, contributed to rises in stress and mental ill health and poor levels of employee engagement levels.

As with many HR concepts, the implementation of total reward has often differed from its policy intent, the paper suggests. The success of true total reward policies depends on how employees perceive and receive them, not on what employers promote, provide or ‘push’ onto them.

Employers and HR therefore need to refocus reward strategies around six key areas in order to make total reward a reality for employees:

Providing decent base-pay levels, guaranteeing at a minimum to pay the level of the real living wage.
Re-establishing internal pay and career progression, rather than paying higher awards to new, over existing, staff.
Aligning pay and reward policies with wider HR, talent and diversity management practices.
Greater joining up of government and employer policies, for example in ensuring that ‘work pays’ for those receiving Universal Credit.
Linking reward policies for staff at the top and bottom of organisations, establishing fair and appropriate pay differentials so that all employees can share in the financial benefits of an organisation’s success.
Recognising the pressures that many employees may face, by providing relevant mental health and employee financial wellbeing support.

IES head of HR Consultancy and author of the study, Dr Duncan Brown, commented:

‘Employee engagement, and associated high performance, through total rewards is dependent on how employees feel about working for the organisation. Organisational performance and national productivity will only improve if employees see a genuinely more rewarding future for themselves and their families ahead.’

‘Despite recent interest in the “employee experience”, this needs to become more than another vapid HR programme label and reflect the real-life perceptions of employees. Too many reward and benefits packages fail to address underlying issues of poverty and inequality in the wider economy, and poor levels of employee engagement and workplace experience across many organisations.’