Recognise achievements and sustain engagement

There has been comment in this publication and elsewhere about the importance of sustaining engagement across the public sector workforce at this challenging time. It is essential that we manage effectively the key levers of engagement, such as honest communications, authentic leadership and giving employees and their representatives a voice.
    
Research by the Nationwide Building Society suggests that reward is also one of the top five drivers of committed and engaged staff. My view would be that in the public sector reward is not the top engagement driver, but unless reward arrangements are felt to be fair, they have the capacity to undermine the others.
    
The adequacies of the reward arrangements public sector organisations have in place cannot be ignored at a time when those arrangements are very much in the media spotlight and we face the challenge of doing more with less. Improving productivity is crucial to future success. The people who work for us are realists and understand the pressures we face. However, when the cost of living is rising, pay rates are frozen, pension benefits are likely to be eroded and terms and conditions are under review, it is important that organisations continue to reflect on the adequacy of their reward offering.

Total reward
An increasing number of organisations are showing interest in the concept of “total reward”. The CIPD Reward Management Survey in 2010 reported that nearly one third of respondents from the public sector intended to introduce a total reward strategy in the next 12 months. Some, such as the Departments of Transport and Work and Pensions and Kent County Council already have.
    
Total reward is simply about understanding the value of and managing all parts of the reward package, that is, pay, benefits and the more intangible, relational rewards, which relate very much to engagement.
    
That enthusiasm in the public sector for the total reward approach may have diminished in light of the financial pressure faced. If so this may be a mistake for two reasons. First, research by Hay Group suggests that 78 per cent of employees underestimate the value of the reward package they receive. If issues around pay and reward can inhibit our ability to engage with our staff, it is important that we are able to demonstrate the value of the whole package that we offer.
    
Second, if we wish to sustain the attractiveness of the reward package when pay constraint is likely to remain and pension arrangements will change, we have to manage more proactively the other elements of total reward, if the sector is to remain attractive as an employer to talented people.

Reward strategies
As our focus in the public sector moves from the immediate need to deliver the savings necessary to balance budgets to a longer-term view of future strategy, operating models and organisational cultures, we must consider how our reward strategy should adapt to fit. In redefining our offering to our workforce our focus may well need to be on relational rewards and the benefits package we provide. Giving our staff a voice, authentic leadership, giving access to training opportunities and creating career paths, will be seen as positive developments by our staff and will build engagement.
    
In addition we should look at how we can be more imaginative in offering a range of benefits that our staff really value. Many public sector employers have a good range of benefits, incorporating salary sacrifice schemes. Fewer though have a clear benefits strategy and are proactively managing their benefits offering as part of their approach to reward and their employer brand. Each employee is motivated by different things and more flexibility around what we offer may enable us to achieve a greater impact from the amount we currently invest in reward.
In terms of benefits, do we ask our staff or therefore understand those which they value and those they do not? Do we treat our workforce as one group, or can we differentiate and consider how particular benefits might be attractive to particular groups?

Range of benefits
The introduction of a greater range of voluntary benefits (such as the ability to purchase goods and services at discounted rates) is potentially a way of reflecting the difference in our workforce. Such benefits may also assist employees to stretch their pay packets a bit further at a time when the cost of living is rising. The introduction of lifestyle benefits, such as access to health and dental care, says much about the employer brand, but can also contribute to lower sickness levels. Some private sector employers have introduced vouchers and gift cards as an alternative to cash incentives, as part of their overall reward strategy
    
In difficult financial times, a business case for investing in benefits would need to be made. A recent IRS survey found that voluntary benefits were offered by 28 per cent of employers in 2009, but only 21 per cent in 2010. A high percentage of those employers had either withdrawn or introduced a benefit in the period, suggesting a careful management of the mix during the recessionary period to ensure maximum impact.

As the public sector faces up to a decade of constraint and change, we must think about all aspects of reward. At a time when we need to sustain engagement and motivation and when those aspects of reward which we traditionally focus on, pay and pensions, are under threat, we need to stimulate a debate around our benefits package and our relational rewards, as a means to sustain the attractiveness of our offer and retain the talent we need.

For more information
www.ppma.org.uk

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