Remuneration, rewards and HR trends

By Chris Blair, CEO of 21st Century

HR Trends
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“Appreciation is a wonderful thing. It makes what is excellent in others belong
to us as well.” – Voltaire

It’s always important to remember that loyalty has never come from “cracking a whip”. French philosopher and writer Voltaire’s words ring very true, despite the fact that he penned them over 200 years ago.

Happier people are simply less distracted and more positive. And they pass that on through referred positive actions. So, the more value you bring to your employees’ lives, the more they’ll bring to your company. And employees should never feel like they are the “Have Nots” if they see company leadership as the “Haves”.

Rewarding your staff members can do wonders for morale and for your turnover. And employee rewards and remuneration schemes do get results. The past year has seen a few shifts in remuneration, rewards and human resources trends. Here are some TOP TRENDS for the coming year.

Where corporate governance is headed
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Trust and transparency have become extremely important as society in general becomes more accustomed to free access to information. And there has been a particularly strong focus in recent years on what directors are earning, with single figure reporting for top management openly exposing the top earners’ total pay within organisations.

Principle 14 of the King IV Governance report makes it extremely clear that ethics and fairness are paramount when votes are cast by governing bodies, stating: “The governing body should ensure that the organisation remunerates fairly, responsibly and transparently, so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.”

Non-binding “No” votes on remuneration policy are on the rise, as stakeholder scrutiny and awareness increases. And there is a possible move towards binding votes on the cards for
the King V report. Fair and transparent pay policies are becoming a necessity for compliance with the SOE guidelines for each sector. And there is a stronger focus on aligning variable pay to company performance at director level.

Environmental, Social and Corporate Governance (ESG) performance measures are becoming a key component in addressing all stakeholders’ (not only shareholders’) concerns. And the introduction of malus penalties and clawbacks for badly performing, or unfairly paid, executives are becoming more the rule than the exception.

Arresting the wage gap

Reducing the ratio between CEO pay and the general worker’s pay is being helped along by transparency measures and the introduction of EEA4 reporting to the Department of Labour, which implemented the system specifically to address salary parities. It’s likely that we’ll see companies introducing caps on variable pay in the coming year to stay on top of it all.

Greater focus on gender pay parity – and it’s the law

Under the Equal Pay for Work of Equal Value legislation and the ANC National imperative around gender, the male/female pay gap will soon become a thing of the past. Equal opportunity for both sexes is something that all companies or organisations will need to be mindful of to stay compliant.

Minimum shareholding requirements at director level

Executives will be expected to maintain in-employment and post-employment investment. This means that organisations will require that executives hold a multiple of their Total Package values in shares that have no other restrictions, i.e. they have a fully vested interest in the company.

Talent engagement and rewards

The “Total Reward” concept is being adopted by more organisations every year. This is the idea is that companies need to focus on rewarding employees in the broader sense, by adding value to their lives beyond just remuneration.

Some of the staffing trends we’re likely to see more of next year:

  • Increased mobile working.
  • Increased flexitime.
  • Rewards for proactive entrepreneurial and innovative value-add ideas.
  • A shift in performance management from measuring activities to outputs.
  • Provident /pension fund equalisation between execs and general staff – all employees should be able to contribute the same maximum to their provident and/or pension funds.
  • Investment in and closer focus on organisation culture.
  • A greater tolerance and understanding of employees’ needs and “Create my pay my way” remuneration, for example, more leave days, study time, self-development time and holidays.
Change and business transformation management

Technology should never be an inconvenience. It should be adding value to your business as it evolves. And organisations are also recognising that the ever-evolving workforce needs to be respected and managed with sensitivity to stay ahead. Modern change management capability next year should be focused on four key factors:

  • The changing dynamics of the work force, especially inter-generational dynamics.
  • The changing nature of data (and BIG DATA’s massive influence on decision making).
  • IOT (Internet of Things) is changing the nature of work
  • Artificial Intelligence (AI) is directly affecting resource planning and restructuring for changes and job losses in certain industries.
Agile organisation structuring

If you don’t move with the times, it’s likely that they will completely pass you by. Traditional functional corporate structure designs are fading away in favour of more agile, quick-turnaround, team-based decision matrix structures. South Africa is particularly affected by the change in thinking because of globalisation. Both government and private companies are changing.

The trends we’ll see more of in 2020:

  • Business processes are becoming more streamlined – to cater for faster market delivery and more demanding and informed clients/voters.
  • Organisations are becoming viewed less as “machines” and more as sentient “organisms”.
  • Union membership is declining, which is a natural consequence of easy access to information among ordinary employees who can engage directly with much more ease.
    These circumstances have generated an entirely new level of complexity in designing jobs, job profiles remuneration packages.
  • Skills audits are on the rise, as organisations work towards achieving the right ratio between superior performance and their wage bill. Audits also ensure that organisations are optimally staffed to deliver on their strategies.
  • There is an increased focus on team-based pay or “as organism” structure.

This article first appeared in the Dec/Jan issue of Your Business Magazine. Read the free digital issue here.


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