· 2 min read · Features

The year ahead: Some personal hopes for pay and reward management in 2010


This year has been the toughest most of those with responsibilities in the area of pay and reward management will have experienced in their lifetime. Extensive pay freezes with some pay cuts in the private and third sectors, and the fear of what's to come in the public; pension and benefits changes and cuts; and generally doing more with less. All of these have presented many of us with unprecedented professional and sometimes personal challenges. And so many (me included) will be celebrating the end of this year with especial vigour.

So what are my hopes (rather than necessarily my actual expectations) for 2010? Here are my seven wishes:

1 That with economic recovery and inflation, earned and affordable pay increases once more become the norm throughout the private and third sectors. Incomes after all drive our service-driven and knowledge-based economy.

2 That the financial services' reward model, which was seriously implicated in contributing to the economic crisis over the past year, really has been changed, and that we don't see more than 5,000 bankers earning £1 million-plus through short-term and individually-driven bonuses, particularly those in state-owned banks.

3 That the Taxpayers Alliance shuts up and turns its critical attention on financial services' pay, rather than on that of NHS and local authority chief executives. The high-performing chief executives of these bodies deserve every penny - a recent study by PwC found the pay gap with the private sector to be almost 50%. And for those who don't deliver, the turnover of NHS chief executives is now higher than their private sector counterparts. Of course there are anomalies and inconsistencies in public-sector pay. But try taking a look at the FTSE and the lack of actual relationship between executive total earnings and corporate performance before you criticise too harshly.

4. That we see a sensible and reasoned approach to managing cost and debt reduction in the public sector, whoever wins the general election. The history of blanket pay controls and freezes in the UK is not an auspicious one, and rapidly rising price inflation will make 2010 a very different context for zero pay increases in the public sector compared with the private sector's experiences in 2010. A blanket pay freeze may look simple and fair but is in fact the opposite, unfairly penalising the most able and highest contributing public servants and those living in the highest cost locations.

5 That fairness returns to its rightful place, alongside the market and performance, as a key objective for, and determinant of, pay and reward systems. That we see executives brought back into the reward structures that are used to manage their staff, and that executive bonuses don't pay out if general staff bonuses and profit-sharing schemes do not. That remuneration committees all assess the fairness of rewards in their organisation, and carry out equal pay audits to measure their situation and stimulate action to address unfair pay gaps and differentials.

6 That some of the creative and successful ways in which employers and employees have worked in partnership to cut costs while saving jobs this year are retained into the good times, so that we see more examples of everyone able to share in the success of their enterprise. Performance-related reward should be for the many, not the elite few, and the John Lewis Partnership rather than the investment banks should be the reward model for many more employers.

7 That open communications returns to the field of pay and reward, with employers willingly publishing sensible and well-informed details of their gender pay gaps and what they are doing to address them; and that they put far more time and effort into ensuring their own staff understand and appreciate the value of their total rewards package. A recent retailer's survey showed that we spend considerable more on average on Christmas presents for our sons than our daughters (though as the father of two teenage girls I do find the data somewhat questionable based on my own expenditure this year).

May I wish you a very a happy, hopefully peaceful, positive and prosperous, and more fair and equal 2010.

Duncan Brown is director of reward services at the Institute of Employment Studies