Unwrapping the benefits package

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Introducing a total reward system lets staff understand the true value of their remuneration.

As a senior manager in a local authority, you probably value your staff highly.

As an employer, the council should see its role as vital to its success. And hopefully the pay and benefits package awarded to your team will compare favourably with what they would receive for an equivalent private sector role. The bad news is that none of this will help boost morale or improve staff retention if staff don't know how much this package is worth.

Step forward the concept of 'total reward'. This is the term that has been adopted to describe a reward strategy that includes non-financial components such as learning and development, together with perks like flexible working and a positive organisational culture. Historically, local government staff have undervalued their employment packages. In fact, public sector benefits such as pension, holiday and flexible working hold a higher value than those in the private sector.

In a bid to change this, the Cabinet Office has recommended that public sector bodies consider introducing total reward statements as a means of communicating and reinforcing the value of benefits to staff.

Local Government Employers (LGE) points out that all aspects of the experience that staff  have at work are potentially rewarding, and they therefore have a value that can be used to encourage people to make a greater effort. "The starting point is to talk to employees about what they value — what is important and rewarding for them," says Jon Sutcliffe, principal strategic adviser at LGE.

"You can then gradually encourage people to get involved in tailoring a reward package that suits their own needs at different times in their lives. Both surveys and dialogue can help you understand your workforce."

Pilots have been set up by Buckinghamshire, Cambridgeshire and Hertfordshire CCs. The aim is to assess the effectiveness of total reward in local government. The first pilot begins in September, and an evaluation survey will be carried out at the end of the year.

Stephen Moir, director of people and policy at Cambridgeshire CC, and president of the Public Sector People Managers' Association, says: "Having a reward statement is part of an improved approach to compensation, reward and benefits.

"The feedback we have had from staff indicates that we haven't been as good as we might be at advertising all the benefits we are offering to employees."

Mr Moir adds: "We need to clearly articulate to staff what they are getting — including holiday entitlements, level of training and so on. People do focus on salary and pension when they think about what they are awarded by their employer, but not necessarily on training and development, flexible working and other benefits.

"A total reward statement draws this up into a single document, so that they can see exactly what they are getting."

According to Paul Sparrow, Centre for Performance-Led Human Resources director, and professor of international human resource management at Lancaster University Management School, a reward statement can help with both recruitment and retention.

"A total reward package statement can help you recruit high-talent staff or attract the right people during a skills shortage," he says.

But there are drawbacks. Chiefly, the risk that some staff may think others are being given preferential treatment. For managers, the issue here is transparency.

"Traditionally, employers have talked to very senior staff about their reward package and what can be changed. Total reward is about having these discussions with staff at a more junior level," says Prof Sparrow.
 
Making this available to junior staff can be risky, and de-motivate those who feel they are not offered the same deal as colleagues. So it is essential to set up clear systems, which are applied to all staff, not just an elite few.

Cambridgeshire and its partners are in the process of working out a new approach to rewarding and motivating staff. It is not just about what staff receive from employers, but what their perception of this is, and what this means to them.

"A reward statement can help you demonstrate to applicants and employees alike how much you value them," says Prof Sparrow. "And it shows them respect as individuals if you are able to take their needs and priorities into account."

Dos

• Talk and listen to your workforce. Ask people what they value most. Do this through direct line management, working with trade unions and conducting regular staff surveys

• Be transparent. A total reward scheme will be divisive if it's aimed only at the chosen few. Make sure yours is fair and equitable

• Keep up with new developments. This is a new venture for the public sector, so watch this space

Don'ts

• Rush into a total reward programme. Getting it right takes time, and you need to understand staff needs

• Be elitist. You may want to recruit and retain top performers, but make sure that all staff know their efforts are being rewarded by this scheme

• Assume that one size fits all. You will need to understand the needs and motivation of your own staff and how that connects with the total reward