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Modernising pay and rewards strategies
Pay structures can speak volumes – not only in their implications of values, equality and worth to employees and the community they serve, but to the performance of the authority itself. Getting a structure to reflect this is a challenge local authorities face on an ongoing basis. It requires commitment from senior managers, members and human resources.
What are the benefits?
A modern and strategic pay and rewards system can:
- lift motivation and drive service improvement if people are rewarded properly for their contributions
- increase the efficiency of the day to day running of your pay and rewards system
- prevent discrimination and ensure that all staff are paid fairly, thereby eliminating any liability to big equal pay claims
- become a powerful method of innovating change and improvement when pay systems are no longer used solely as an administrative tool
- help cost/performance calculations to be accurately estimated thereby enabling authorities to inform residents and central government of the actual efficiency of the council’s operations - and also provide the chance to identify and act on specific under-performing areas
Designing a workable and flexible pay and rewards strategy will vary from one authority to the next. The strategy needs to help achieve corporate objectives, support corporate objectives and ensure fair pay. It then needs to be assessed through an equal pay audit and a single status pay review.
The Improvement Network provides information on modernising pay reviews, including publications.
Making it work
Effective pay and rewards systems need commitment and action from senior managers, members and human resources. Councils need to recognise that this is a potentially costly process, especially given the need to deal with equal pay. Changes can be introduced in a step-by-step approach to help control costs.
The following checklists are designed to help establish who exactly should be doing what.
Senior managers and members should:
- commit to pay equality and ensure that the council develops and promotes an equal pay policy
- commit to developing an effective performance management system that integrates individual, team and organisational performance objectives
- ensure that pay data is fully integrated into the council’s performance management system so that the council’s efficiency can be properly assessed through cost/performance calculations
- staff need to see a link between their pay and rewards and their efforts towards service improvement – this culture change should become a strategic corporate objective
Human resources teams should:
- demonstrate the strategic impact of new pay systems to senior management
- develop proposals for a new pay structure
- assess the adequacy of personnel and payroll data
- carry out a risk assessment and ensure that they can manage the whole project
- carry out an equality impact assessment of the proposals
- complete the process of the local pay review
- implement the new structure
- organise regular equal pay audits after implementation
- ensure that training is available for all staff on equality and diversity issues
- ensure special training is available for line managers who have been given new performance management responsibilities
- communicate pay change and their importance to staff, and encourage their feedback
- develop their performance management skills so they can handle appraisals, manage underperformance and give staff work-life balance and development opportunities
- manage their teams well so that employees remain motivated and always want to give their best