Dr Duncan Brown: Should we focus on a different approach to total reward?

Duncan BrownHow is your total reward strategy holding up these days? Not that well I warrant, following the ravages of two years of the Covid-19 (Coronavirus) health crisis and now facing the onslaught of the worst cost-of-living crisis in living memory. So what is the problem with the common total reward focus and branding for reward policies, and what might replace this?

It does not take a PHD in reward strategy to see the inconsistency at best between pushing an extensive menu of total reward at employees who are not feeling totally rewarded at all.

After a decade of intermittent real pay cuts, staff face losing 4% of their pay in real terms this year, and it is worse for the lowest paid. That is more than £1,000 and is due to the gulf between slowly inching up pay awards, which are up to a median 4% in April’s Office for National Statistics’ figures, and price inflation, which has rocketed up 10 times from just 0.7% 12 months ago, exceeding even the recent 6.6% uplift in the still too low national living wage. In the current UK labour market, with a record high 1.3 million vacancies and record low unemployment, the most likely employee response is to leave in search of higher pay.

There are other issues with total reward. The Institute for Employment Studies’ (IES) literature review from 2016 titled The relationship between total reward and employee engagement found confused terminology that was difficult to isolate and research, leading to complex and controversial relationships with performance and HR practices. In practice, for many employees total reward just means a routine annual choice from a limited list of benefits options, which most leave to the default provisions.

What terminology might better characterise contemporary context and strategies for 2022 and beyond? Health and wellbeing have been a huge focus during the Covid-19 pandemic and this is likely to continue, whether it is seen in the reversal of the previous decade of sick pay policy cuts or in the continued extension of employee assistance programmes, incorporating newer offerings such as mental health apps and online counselling.

Perhaps most of all we need to return to a focus on pay, protection and progression in contemporary reward strategies. Increasing pay is the simplest way of improving employee wellbeing, helping to explain the pay battle and rises currently seen for shop floor staff in major supermarkets. Indeed, charitable foundation Trust for London demands that all keyworkers be paid at least the real living wage, which is £9.90 per hour outside of London and £11.05 per hour inside the capital, with both above the national living wage rate of £9.50.

Total reward can only survive if its meaning and application are totally reborn into a new, more pay-focused, engaging and responsible approach.

Dr Duncan Brown is a principal associate at the Institute for Employment Studies (IES)