Reward is constantly changing. What is valued by one generation may differ wildly from the next, and reward professionals have to adapt to this. In the past the function was a largely data-driven, back-office environment, before the early 2000s saw more innovation as organisations fell over themselves to compete for and retain top talent through ever-more imaginative means.
Now though, at least in some sectors, the pendulum has swung again. In the wake of the global economic recession, there is once more a far greater emphasis on regulation and compliance. Rewards professionals have to contend with legislation such as the Capital Requirements Directive IV and other stipulations from regulators including the Financial Conduct Authority, Prudential Regulatory Authority and the European Banking Authority.
“The big banks were hit first but this is now filtering down to insurance businesses and smaller asset management firms,” says Matt Brooks, partner at HR recruiter Eyzon. “The focus has shifted from being artistic and playing around with the psychology of the human being to just ensuring compliance.”
This isn’t confined to financial services, says Brooks, pointing out that other corporates need to be seen to have responsible pay practices – particularly for executives – not least to avoid damaging headlines that could impact share prices or profits. “If you’re in the public sector you’ll get shot at by the unions, and if you’re in industries such as retail, pharmaceutical, telecoms or hi-tech, there is always talk about the difference between the CEO’s pay and that of staff,” he explains.
Expectations around reward and its role are also changing more broadly. A greater focus on curbing excessive behaviour means those working in the function are expected to be more questioning of leaders and managers, to ensure they understand the kinds of behaviour that are expected of them and their teams.
“The new skillset is being able to position an employee value proposition at the right level that attracts people into a market, but also to put together bonus and compensation plans that can stand up to scrutiny,” says Zoe Spicer, a speaker on Ashridge Business School’s strategic HR management course and former head of HR, EMEA at Adobe. “Reward professionals need to go more shoulder-to-shoulder with the finance director, understanding the strategy and building the employee value proposition. I’m not sure we’ve always done that.”
This shift in emphasis is starting to have an impact on the types of skills – and characteristics – that reward professionals need to have. Anna Penfold, client partner in the HR practice of Korn Ferry, suggests successful individuals need a mix of both strategic vision and technical abilities such as attention to detail.
“If you’re looking at Company X five or 10 years down the line and trying to identify how you could drive the reward agenda to support the wider strategy, you need someone who is able to look at the big picture,” she says. “But you’re then twinning that with the most finite of detail in every single part of the reward mix. You’re looking for someone to be very rules- and process-based and to almost look at it as a legalistic function, while being as creative as possible within those boundaries.”
This more strategic role also means individuals need to deploy greater personal skills, including influencing and communicating, suggests Eyzon’s Brooks. “You still need to be deeply analytical and naturally capable of chomping numbers up, but you also need to face off to the business and to be charismatic enough to sit in the room with the people you’re affecting,” he says. “Previously that was the remit of the HR director but now I often get told ‘I need someone I can put in front of the business and who can engage with the CEO’.”
Barry Pirie, president of the PPMA and director of people and business services at Wiltshire Council, says reward can no longer be done by HR generalists. “They need a significant technical brain with the basic skills around the numbers, the codes and the scrutiny regime that we’ve got,” he says. “But then they also need the communication and soft skills to make those clear to the business. It’s not an easy one to recruit for.”
Also having an impact on the type of people who want to work in reward is a greater concentration around data, says Brooks. Some people have welcomed the move towards a more data-based role, returning, as he puts it, to their “inner geek”, and preferring to be judged by their output rather than their personalities. Others are beginning to move away from financial services reward – where they were initially lured by their own reward package – and are now looking to move into areas where they can be more creative. “Those who have these rock-star qualities and want to be higher-profile are starting to think that maybe financial services isn’t the area for them any longer,” he says.
Not all sectors have been touched by the move towards greater compliance and regulation. In the consumer goods sector, as well as ensuring pay packages remain attractive, there is still a strong emphasis on other parts of the reward offering, says John Mayor, head of UK reward at Danone Nutricia. He gives the example of offering eldercare support as a benefit. “Things like that you wouldn’t have considered even last year, but you have to understand what your employees want,” he says. His team has also recently challenged suppliers to come up with new benefits, including tailoring particular products, such as a pay-as-you-go emergency vehicle assistance policies.
Those organisations that do have to wrestle with greater scrutiny
and compliance, however, will need to either develop or recruit the necessary skills. Technical skills and even strategic thinking can (to an extent) be acquired through training, believes Korn Ferry’s Penfold, but the personal characteristics are much harder to coach. “The most difficult thing to find is this communication style and the ability to form relationships and have impact at every level,” she says. “Some people can learn how to act and play the part, but that doesn’t appeal to everyone, and not everyone can do that. There are some people who have said they’re happy to consider being head of reward but maybe not at a group level because of what that entails.”
Those with the right capabilities are inevitably in high demand, which means organisations may have to start to think more laterally. Ingrid Waterfield is director of KPMG’s People Powered Performance, and previously head of UK performance and reward at the firm. She believes the extra emphasis on data in certain sectors, combined with improvements in technology and data analytics, is even having an impact on more junior positions, and could help to alleviate shortages. “Previously someone might have spent a few years as an analyst, but now there’s a real opportunity for people to add more value early on in their career by having the data at the touch of a button and being able to understand it,” she says. “People will need to be able to explain what’s going on, whereas previously they were able to say they were just providing data, and didn’t have to interpret it.”
Former accountants or lawyers could also be a potential source of talent, adds Waterfield, while Penfold suggests those working in the company secretarial or finance functions might have the right mix of commercial nous and data capabilities. Pirie believes more people will start moving into the function from other disciplines. “Many of the most successful HR specialists and managers within my team have come through a mixed development path,” he says. “Not many of them have been dyed-in-the-wool HR professionals.”
In the longer term, however, we could see the emergence of a purely compliance-focused reward professional sitting alongside those tasked with the more creative elements of the job. “You’ll probably get people with different skillsets looking at those elements, so it might be that you get tax professionals moving into a broader reward role but with a compliance angle, and maybe linking compliance and payroll together,” suggests Waterfield. “Then on the other side you may have someone who has been a consultant or worked in HR moving into reward to develop the more innovative aspects while not having to deal with compliance all the time. I’ve not seen that happen yet but it’s probably the direction of travel.”