Reward U-turns can turn out for the best

If you read nothing else, read this…

• Employers have been forced to adopt new ways of cutting costs during the economic downturn, sometimes having to reverse previous decisions.
• An HR U-turn can be necessary to come up with the best solution for the business and its employees.
• One employer made savings on absence management after rethinking how best to handle its policy.


U-turns are not a bad thing in reward and benefits if they can bring about better results, says Nicola Sullivan

A high-profile policy U-turn is not always a bad thing, especially for those of us who are partial to the odd pasty after chancellor George Osborne reversed plans to slap 20% VAT on takeaway snacks fresh from the oven.

Compensation and benefits professionals are also not averse to turning their backs on half-baked ideas on the remuneration menu. In some cases, a change of tack will turn out to be the best option.

This was certainly true for one public sector employer facing a dilemma over how to manage employee absence. Its absence strategy entitled all staff to one month’s sick pay, irrespective of length of service. This was open to abuse because staff were able to self-certify their absence for the first seven calendar days. Also, new recruits could go sick on their first day of employment and still enjoy full pay for the following month.

To make its absence management scheme more cost-efficient, the organisation planned to introduce ‘waiting days’ before the sick pay benefit kicked in. But it backtracked on this idea, instead introducing a new absence recording system and measures to tackle health and wellbeing issues. The organisation’s reward and benefits manager says: “A better absence recording system allowed us to get better help to people more quickly.”

The change also enabled better management data to be collected on the impact of conditions such as stress and anxiety. The employer also introduced health and wellbeing measures, including an employee assistance programme, a health cash plan, and campaigns and activities to encourage a healthy lifestyle. The changes saw its yearly absence bill fall from £1.1 million to £850,000.

In recent years, private sector employers have had to change their approach to reward and benefits to survive the economic downturn. Matt Norton, senior benefits consultant at JLT Employee Benefits, says employers have adopted a number of innovative measures to reduce costs and minimise redundancies, including four-day weeks, flexible working, remote working and unpaid leave. “That was a real step change,” says Norton. “It was a positive U-turn in that regard.”

As the downturn began to bite, one financial services firm that had set its employer pension contributions at 10% under a new reward strategy cut this to 3% for lower earners and suspended contributions entirely for higher earners. Its reward manager says: “This was intended to be for 12 months, but at the end of the year the company decided it made financial sense to keep contributions at 3% for everyone for the time being.”

The organisation now matches employees’ pension contributions up to 2%.

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At the lighter end of the U-turn spectrum, one benefits professional recalls a comical change of approach at a former employer involving a salesman who put in a claim for some deodorant he had bought on the way to a meeting he was late for. The cashier told him it was his fault he was late for the meeting, but he insisted he could not have attended the meeting in the state he was in without it. The cashier eventually allowed him to claim for the deodorant as long as he returned its remaining contents to the business.

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