I recently met with a FTSE 100 Reward contact of mine and our conversation quickly turned to the recent CRD IV policy and the associated changes in legislation to effect compensation. Change and the capacity to implement change from both a financial and organisational standpoint are current hot topics, particularly around the effect on staffing levels, retention and transient career changes, which may impose a more determined focus of compliance within commerce & industry.
One school of thought is that financial services firms have, up until the implementation of CRD IV, had a more simplified retention package with an emphasis on deliberating whether they can offer a more attractive base/bonus package than the competition. With the changes coming into force, many multinational businesses feel that the way to circumvent this is to increase base salary and limit variable pay. The inevitable increase in fixed costs is seen as acceptable to retain the regulatory and governance knowledge within the organisation.
Others, who have less flexibility around budgets or a different angle of approach, are contemplating whether the time is right to be more commercial around their attraction strategy. The justification comes at a time when they can no longer offer bountiful bonuses in light of the implied longer hour’s culture of financial services. Thus the answer is to utilise the skillset of commerce & industry Reward professionals who have had to be more inventive around compensation, merely because they were unable to compete with financial services variable pay.
Will this lead to a more complete Reward professional who is even further submerged as a cross sector Reward lead? Or a more linear dedicated compliance individual who will bring a specialised skillset to a business, but with the unavoidable escalation in salary?
My hope is for a free flowing transfer of knowledge, where Reward practices are improved through strategic forward thinking performance metrics. It's imperative that Reward isn't perceived as just the cash value of the guaranteed and variable compensation, but also the affiliation to the business and the brand that the individual is working for.
Regardless of the outcome, one certainty is the onset of compliance proving a critical element to the sustainability of any business. This must be carefully managed within all sectors to utilise the guidelines for the benefit of the firm and also to offer employees an alternative to formulaic Reward.
I hope you have found this discussion to be informative.
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