Reward & Share Plans
Reward and Share Plans
- Reward strategy development and implementation.
- Short and long term incentive plan design.
- Broad based employee stock plans
- Global stock plan design and roll-out.
- Compensation and benefits harmonization.
- Target operating models and processes for Reward.
- Recognition plan design.
- Building in-house reward capability.
- Interim reward management.
- Fair pay agenda: CEO, ratio gender and ethnicity pay gap reporting
Pay Rise Logic
Inflation is now a fact in many western economies. After decades of low inflation, the implications for pay need to be revisited.
When inflation bites, “a pay rise for all ” might be the first thought. But first consider:
- Rising cost of living hits the lowest paid the most.
- Rising labour costs mean price rises, or less profit;
- And so maybe more mechanisation and fewer jobs.
In normal times, a price increase signals more demand than supply, a signal for supply to increase. Inflation price rises happen alongside that process and cannot be untangled.
Your customers too face higher wage costs at the same time as you want to pass on to them your own increasing costs. Passing on your extra wage cost is not so simple.
But inflation is a business fact and cannot be ignored. Predictably, minimum wage and living wage figures will rise, that will impact differentials and the market rate. There are time lags; but the upshot will show in pay survey figures as well. So, beware of double counting.
Executive compensation is less impacted by inflation. The standard of living for the higher paid changes less than the lower paid, as the cost of essentials such as food and energy rise.
Performance pay forms a higher part of their total package; so, if a rise is needed, investors will expect that in performance pay opportunity, not base pay alone.
Reward and executive compensation management is difficult even with steady state prices. Inflation adds an unwelcome extra dimension. When inflation was last a headache, reward practices were very different to today.
The “pay rise all round” thought will not be sufficient. A more nuanced response, recognising business circumstances, larger pay differentials, bigger pay bands and more emphasis on pay for performance profile are more likely.
A more creative approach to growth pay is often needed
“Great business models can reshape industries and drive spectacular growth. Yet many companies find business-model innovation difficult.”
Cleyton M. Christensen
Kim B. Clark Professor of Business Administration
Harvard Business School