News and views

Senior Consultant Dan Briselden reviews Q4 in the Reward market...

Posted by: Jade Sweeney

Senior Consultant Jade Sweeney reviews the findings from our confidential survey on the attitudes to flexible working in the Reward profession...

Posted by: Jade Sweeney

UK organisations are not offering any more in their annual pay awards than they were three years ago, according to the latest data on pay settlement trends.

Posted by: Jade Sweeney

Almost one-third (29%) of female workers will receive a pay rise as a result of the new national living wage (NLW), according to a report by the Resolution Foundation.

Posted by: Jade Sweeney

As part of the Summer Budget, the Chancellor announced plans to change the tax treatment of termination payments and the £30,000 golden egg exemption in order to simplify things. Matt Gingell assesses whether or not the proposals will be for the better.

 

Posted by: Jade Sweeney

Women work for free for one hour and forty minutes a day, according to new gender pay gap data from the Chartered Management Institute and XpertHR. 

Posted by: Jade Sweeney

Netflix has announced parents can take unlimited parental leave in the first year. Photo: ddp USA/Rex Shutterstock

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Streaming media giant Netflix has announced that it will offer new parents unlimited paid leave for a year. But employers who wish to follow their example may encounter challenges, believes Tina Wisener. 

The announcement by Netflix that it will be offering all its staff the opportunity to take up to 12 months’ paid parental leave has provoked a lot of interest.

Shared parental leave resources

Shared parental leave survey: employers undecided about enhanced shared parental pay

Task: decide the organisation’s policy on shared parental leave

Letter explaining to managers the right to shared parental leave

Its employees will be able to work as much or as little as they want during the 12 months following their child’s birth or adoption, and still be paid in full.

The employee benefits of such a generous scheme speak for themselves but there are also business benefits.

Netflix hopes that its move will help it to attract and retain the best talent. It also believes that staff perform better at work if they are not worrying about family and finances.

Nevertheless, a scheme which allows employees to dip in and out of work can present headaches for employers in terms of ensuring adequate cover for absences. Inevitably, leave patterns will need to be agreed to some extent in advance, reducing some of the flexibility for employees in the process.

Although there has been a great deal of enthusiasm for the introduction of shared parental leave last year, many employers recognise the benefits of this perk but may not be able to afford to offer it on the same scale as Netflix.

Instead, they might want to limit it to staff in senior roles where it is more difficult to recruit, or use it to incentivise staff by making it performance related. However, there are legal risks associated with this approach.

Employers will need to be alert to discrimination risks, particularly indirect discrimination. If, for example, senior roles are occupied predominantly by men, limiting the benefit to senior roles will be indirectly discriminatory against women.

However, indirect discrimination claims can be defended if there are good business reasons; the need to attract and retain the best talent would certainly qualify. However, the employer will also need to be able to show that it cannot achieve its business goals in a less discriminatory way.

 

Posted by: Jade Sweeney

 

Netflix has announced parents can take unlimited parental leave in the first year. Photo: ddp USA/Rex Shutterstock

Share on facebookShare on twitterShare on emailShare on pinterest_shareMore Sharing Services3

Streaming media giant Netflix has announced that it will offer new parents unlimited paid leave for a year. But employers who wish to follow their example may encounter challenges, believes Tina Wisener. 

The announcement by Netflix that it will be offering all its staff the opportunity to take up to 12 months’ paid parental leave has provoked a lot of interest.

Shared parental leave resources

Shared parental leave survey: employers undecided about enhanced shared parental pay

Task: decide the organisation’s policy on shared parental leave

Letter explaining to managers the right to shared parental leave

Its employees will be able to work as much or as little as they want during the 12 months following their child’s birth or adoption, and still be paid in full.

The employee benefits of such a generous scheme speak for themselves but there are also business benefits.

Netflix hopes that its move will help it to attract and retain the best talent. It also believes that staff perform better at work if they are not worrying about family and finances.

Nevertheless, a scheme which allows employees to dip in and out of work can present headaches for employers in terms of ensuring adequate cover for absences. Inevitably, leave patterns will need to be agreed to some extent in advance, reducing some of the flexibility for employees in the process.

Although there has been a great deal of enthusiasm for the introduction of shared parental leave last year, many employers recognise the benefits of this perk but may not be able to afford to offer it on the same scale as Netflix.

Instead, they might want to limit it to staff in senior roles where it is more difficult to recruit, or use it to incentivise staff by making it performance related. However, there are legal risks associated with this approach.

Employers will need to be alert to discrimination risks, particularly indirect discrimination. If, for example, senior roles are occupied predominantly by men, limiting the benefit to senior roles will be indirectly discriminatory against women.

However, indirect discrimination claims can be defended if there are good business reasons; the need to attract and retain the best talent would certainly qualify. However, the employer will also need to be able to show that it cannot achieve its business goals in a less discriminatory way.

 

Posted by: Jade Sweeney

“Applicants must have proven experience in preparing documentation for the Remuneration Committee having ideally written the Director’s Remuneration Report”.  This was the first experience point of a role profile I recently worked on, and I think this is quite telling.  Wind back the clock 5 years and even the term RemCo wasn’t particularly common place, it rarely constituted a key point in a role profile, and it wasn’t part of the core armoury of your every day Reward Professional.  So why has the significance of the remuneration committee grown exponentially in the last 5 years and what has the impact been across the Reward profession?

Looking back to 2005 Remuneration Committees had a very different agenda and were made up often by Non Exec’s closely affiliated and in many cases financially incentivised by the organisation, whilst not actually employed by them.  A Reward leader mentioned to me recently that at a previous firm in 2002, the RemCo was the CEO’s “mate’s club”, where there was an unspoken agreement to ensure that each other’s financial interest’s were looked after.  Indeed working on an assignment to hire a Head of Reward for a listed firm a couple of years back, I recall the client discussing the makeup of their RemCo and it transpired that the Chair and 2 of the Non Exec’s were from the company next door, and the two other firms across the road, and they all used to drink together with the CEO in the local pub.  In short RemCo to many firms was almost a token gesture, shareholder votes were considered but not necessarily acted upon, and executive pay often went unreported or was unexplained in its makeup.  Things needed to change.

The simplest answer to how they changed lies in the government’s legislative amendments back in 2012, which were then ratified in October 2013.  Two key points suddenly tranformed the very nature of the Remuneration Committee from ceremonial (and in some instances symbolic) to rigorous and ruthlessly tough on excessive board payments.  Shareholder votes on remuneration reports became binding and executive pay and the make-up of this had to become absolutely transparent.   Come October 2013 we started to see the press report on negative shareholder votes on front page news, and the makeup of CEO’s packages were aired like dirty laundry.  There was public outcry concerning unsubstantiated bonus payment to executives, and once a business received a negative shareholder vote (Burberry, UBM and AVIVA to name but a few) senior heads started to roll as if they had committed a heinous crime.

 Within listed firms there was a sense that many were caught napping after BIS legislation came into being thus we saw the need to up skill reward functions or hire experienced reward professionals with good RemCo exposure.  The importance placed on a Director’s Remuneration Report led to make or break scenario for many HR Director’s.  We saw many HR Director’s pass the seat at RemCo onto their Reward Professional citing that the expertise lay with the Reward Director and taking themselves away from any accountability perhaps?   In short RemCo prep and presentation became a core skill to the Reward Profession, and ever since we have seen many in Reward make active career changes to bolster their experiences in this area.

Outside of the legislative changes I think there is perhaps a longer and more subtle answer worth noting.  The financial crises and subsequent meltdown of the banking arena created an “anti-wealth”/ “anti- bonus “clamour across London, and some experts have commented that this popularist psyche infected its way into the commerce & industry arena.  It is well documented that the recession took its toll across all industries not just financial services and Vince Cable’s focus on increasing the importance and rigour around remuneration committees was needed.  However, many feel that this perhaps was more about curtailing executive pay and limiting “fat cat” style bonus payments rather than ensuring that executive pay equated to organisational performance.  In 2009-2010 there was a cultural undertone where bonuses regardless of personal or company performance carried a negative connotation, and in an economy where firms were seeking to take competitive advantage, being seen as a responsible and ethical firm would often differentiate you from your competitors.  Boards worried that executive bonus payments would drive customers to their competitors regardless of how well the company had done.   Often the challenge laid at Reward’s door was to find a way of incentivising executives, reporting it clearly and concisely for shareholders, and justifying it to the nth degree to ensure the press and Joe Public would view you in a positive light; not an enviable task I admit! Therefore perhaps even prior to BIS proposed changes the importance placed on RemCo was already increasing?

It is no doubt vitally important for members of the Reward profession to add RemCo prep and presentation to their core skills.  It is straight forward to see technically why this has happened, but perhaps the cultural shift and the overall perception of executive pay expedited this change quicker than it perhaps would have been.  Remuneration Committees are now tough playing fields for the reward profession to navigate successfully, but again this only goes to highlight how Reward as a profession is increasingly integral to an organisations success.

 

 

Posted by: Jade Sweeney

Although pay freezes are becoming less frequent, employers are still only awarding modest pay increases, according to the latest analysis from XpertHR.

Covering the pay awards of almost 2.5 million employees, XpertHR research released today reveals that the median pay award in the three months to the end of June 2015 was worth just 2%, and it has been stuck at this level since April 2014.

Commenting on the data, TUC general secretary Frances O’Grady said: “The Chancellor’s economic plan hasn’t delivered the gains that will get us back to better pay increases.

“We need a stronger recovery, with higher productivity and more decent jobs. But with signs of the economy slowing, major cuts to public services could further weaken growth and reduce the chance of pay rises improving.”

Pay resources

Pay trends July 2015: pay deals remain in the doldrums

Pay awards: 24 July 2015

A national living wage: an important but complex shift in policy

At the beginning of the year, employers surveyed by XpertHR predicted that this would be the case, so it seems that this figure is not surprising to many.

Although pay freezes only account for 6.9% of all pay awards during this period, half are worth between 1.5% and 2.5%, with just one award in six worth 3% or more.

The public sector seems to be faring worst, with pay awards in the year to June 2015 standing at 1.5%. Manufacturing and production and private-sector services are seeing slightly higher increases of 2%.

XpertHR pay and benefits editor Sheila Attwood said: “The going rate for pay awards across the economy is firmly stuck at 2%. However, with the Chancellor announcing that pay awards in the public sector will be restricted to 1% for a further four years from 2016-17, the divide between the value of increases in the public and private sectors is likely to prevail for many years to come.”

With the the national minimum wage due to increase by 3.1% from October, and the new living wage set to be introduced from April 2016, it remains to be seen if this will positively affect pay awards.

 

 

 

Posted by: Jade Sweeney

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