HR Information

Research reveals widening gap between pay and performance

New research has revealed that UK companies are failing to differentiate pay sufficiently for top-performing employees.

The findings demonstrate that there is a clear opportunity for firms to better allocate their resources to attract, motivate and retain their best employees as the state of the market creates more competition for talent.

Employers in the UK are falling short in how they deliver pay programmes including base salary and bonuses, even though salary remains the foremost consideration for workers in the UK when deciding to join or stay with a company.

Employee attitudes

The 2014 Towers Watson Global Workforce study shows only a small number of workers in the UK (39 per cent) see a clear link between their pay and performance.

Less than half (43 per cent) of employees believe their employer adequately rewards individuals for break-through ideas, while only 44 per cent are satisfied with their company's attempts to explain its pay programmes.

Carole Hathaway, Global Leader of Towers Watson’s Rewards practice, said many forecasts are not predicting significant growth in earnings until at least spring 2015.

"Without the current flexibility to expand the pay pot, employers are missing a trick by not using the resources they do have more strategically when it comes to rewarding employees," she added. 

"Instead, they seem to be spreading what they have more evenly than ever in an attempt to keep everyone happy, rather than rewarding their best performers for going the extra mile."

Employer attitudes

Employers give themselves middle-of-the-road ratings on their effectiveness in delivering pay programmes, the study found.

Less than half (42 per cent) said they think their employees understand how their pay base is determined, while only 45 per cent of UK companies were of the opinion that employee performance was fairly reflected in pay decisions.

Only a third (36 per cent) of UK employers said they think their base pay programme is well-executed.

A separate survey by the organisation revealed that pay growth will remain much the same during the next year, with employers in the UK planning to maintain pay rises at an average of three per cent into 2015.

Wage growth in other countries in Western Europe – including France, Germany, Italy, Switzerland and Spain – is outstripping inflation to a greater degree than in the UK, while the growth of wages is even better in developing economies.

In other regions in Europe, the Middle East and Africa, more employers are differentiating pay for high performers than in the UK.

Ms Hathaway commented that it is surprising that a third of employers are awarding a bonus to those employees with a low performance rating, thus hampering their ability to reward top performance as part of their pay performance efforts.

Paul Richards, head of Towers Watson's Data Services EMEA, said firms should be focusing their efforts on rewarding their high-performing employees as this will help them to attract and retain talent.

HR Information

Collaboration with universities benefits employers

Collaboration between businesses and universities is producing a wide range of benefits and boosting students' prospects.

Organisations involved in these partnerships gain access to new talent, better productivity and improved competitiveness – both in the UK and globally, according to a report, which has been published by the UK Commission for Employment and Skills (UKCES).

'Forging Futures: Building higher level skills through university and employer collaboration' reveals that universities also benefit, as they are able to provide relevant, up-to-date courses, diversify their offer and enhance employment prospects for their students.

Professor John Coyne, vice-chancellor of the University of Derby and UKCES commissioner, described the trend for more partnerships as a "quiet revolution" in the tertiary education sector.

"There is no one-size-fits-all solution for people to gain the skills they need. Work-based courses are an alternative way for young people and experienced workers to gain high-level skills, and from the report it’s clear there is a lot of great work taking place," he said.

Mr Coyne added that more needs to be done to support these partnerships, so that they become accepted as a mainstream alternative to a traditional degree.

Improving competitiveness and productivity

The UK's economy is currently in a state of transition and the proportion of jobs requiring high-level skills is expected to increase.

Collaborating with universities enables companies to meet these evolving needs, particularly in cases where traditional education and training are insufficient to do so. 

In addition, employers often benefit when the training goes beyond their specific sector – for instance, they gain when collaborations lead to sustained growth in supply chains.

Putting in place pathways to industry

Clear routes into employment linking education and training opportunities to necessary skills can enable employers to develop and maintain a skilled workforce. Industry-recognised qualifications, developed with universities, can lead to better movement through the labour market.

Attracting new talent

This is particularly important when a certain sector is expecting significant employment growth (expansion demand) or where it is necessary to replace a large number of staff who are planning to retire (replacement demand).

Working with universities can enable industries to overcome barriers to attracting new recruits, giving them access to a pool of talent with theoretical and practical experience, high levels of knowledge and a good understanding of work culture and employability.

Retaining and training existing staff

Training and staff retention can be improved through collaborative efforts. Staff retention can be boosted as employees are able to develop new skills and take on new challenges, while recognising that their employer is willing to invest in their development.

Organisations are able to integrate the skills of their workforce with long-term goals and this could allow them to change the structure of their organisations, their recruitment policies and their approach to continuing professional development.

Employers are being encouraged to think about which of their skills needs would benefit from collaboration with a university. They should then consider contacting institutions with known expertise in the sector to begin discussions.

HR Information

Lack of opportunity ‘is hampering staff retention’

New research reveals staff retention is being hampered by a lack of opportunity and structure within their organisations.

HR service company Penna found that the absence of opportunity was the main reason behind employees' decisions to leave companies during the past 12 months, cited as such by 20 per cent of respondents.

In the same period, one in three organisations have witnessed a rise in resignations. Despite this, 20 per cent admit they have no formal approach to succession planning.

Investment in learning is becoming a high priority for many companies, with 42 per cent of respondents predicting they will spend more money in this area during the next year.

Despite this emphasis on learning, the survey revealed career conversations take place annually only in a small majority of businesses (51 per cent). In firms where such discussions are held, 25 per cent of managers are not trained to conduct them.

Bev White, managing director of Career Services at Penna Plc, said: "Having conversations annually is not enough for career development starved individuals that are keen on getting their chosen career path back on track."

"For Generation Y and C as well, we know that frequent conversations about their career progression are desirable – so businesses need to consider how to build in regular informal catch ups with constructive feedback."

In a separate report, Penna claims mentoring could prove to be a useful tool for organisations looking to retain staff and prevent a 'talent drain'.

According to its research, 20 per cent of employees are not involved in mentoring schemes but would like to be.

The majority of those who engage in such initiatives do not see them as an opportunity to find work elsewhere. Just one in ten harbour such intentions, while 59 per cent see mentoring primarily as a chance to acquire new skills.

An in-house approach would be the most productive way to implement mentoring schemes, the report found, as 64 per cent of employees consider an external mentor to be the least desirable option.

HR Information

Jobseekers ‘can be deterred by first impressions’

New research reveals more than two-thirds of jobseekers would turn down an offer of employment if their first impression of an organisation is substandard.

This is according to, which has published data on the factors influencing interviewees' decisions. The findings could help HR professionals ensure the recruitment process isn't jeopardised by external factors.

Appearances play a significant role in decision-making, with 35 per cent of interviewees saying they would not accept a job if they did not like a company's reception area.

Interviewers also play a key role and 50 per cent say they could be influenced by a recruiter's dress sense, while 60 per cent make judgements based on their handshake and 58 per cent on the quality of their conversations.

Some 51 per cent of job candidates said they would turn down a job if they were kept waiting too long in reception.

First impressions play a crucial role for both interviewers and interviewees. According to the report, applicants have just 6 minutes and 25 seconds during the first meeting in which to make a good impression on interviewers.

Only work experience (36 per cent) ranks higher than first impressions (24 per cent) in employers' minds, while education is the third most important factor (12 per cent).

Punctuality is the best way for candidates to make a good first impression, with 96 per cent of managers saying good timekeeping is important. Level of interview preparation is important for 93 per cent, while the ability to hold eye contact is valued by 82 per cent.

A candidate's physical appearance is also important to interviewers, with more than two-thirds (72 per cent) of employers admitting they would be deterred by tattoos and 62 per cent saying an applicant's dress sense could influence their decision making.

Corinne Sweet, organisational behaviour psychologist, commented: "We make instant assumptions about people and can judge harshly or form fantasies, based on external factors including: style, tattoos, skin colour and their accent. These impressions can be right or wrong, but employers need to understand that employees are forming their impressions too!"

HR Information

HR ‘failing to monitor candidates’ experiences’

New research reveals many employers are failing to monitor candidates' experiences when it comes to recruitment.

Up to 60 per cent of HR professionals are doing nothing to monitor the impact of their hiring experience, even though 70 per cent understand the importance of this factor to the recruitment process.

Some 64 per cent of those surveyed in the CEB Global Assessment Trends Report for 2014 said it would become more difficult to hire candidates within the next 12 months, meaning a company's image could grow in significance in as part of a successful recruitment process.

HR Review reports that nearly half (49 per cent) of candidates are left with a negative view of an organisation in a traditional recruiting process. One in five of these people will expose the business to reputational risks by complaining to family and friends or airing their grievances on social media platforms.

Ken Lahti, vice president of product development and innovation at CEB, said that while recruiters realise the importance of a positive candidate experience, very few are actively measuring candidate reactions.

He added that the recruitment process can be an important marketing tool and can have an impact on future candidates and customers.

"Unless companies invest in actively monitoring candidate experience and improving their hiring processes, the candidates they approach today may negatively influence the people they want to attract tomorrow. A poor reputation – born of bad candidate experience – can stifle the talent pipeline for the future," he said.

The difficulties in attracting suitable candidates anticipated by those surveyed in the CEB report were highlighted in the Recruitment and Employment Confederation's recent Report on Jobs.

It revealed the number of applicants available for jobs declined at its sharpest rate for 16 years during May as the number of vacancies continues to rise.

The availability of temporary and contracts staff, as well as those available for permanent positions, declined sharply. The greatest demand for staff was experienced in the accounting and financial sector.

HR Information

HR to raise technology investment

A new survey of HR departments reveals many firms are looking to strike a balance between people, process and technology.

Towers Watson's 2014 HR Service Delivery and Technology Survey shows one in three companies are set to boost their spending on HR technology in the coming year compared with the previous 12 months.

Some 23 per cent plan to raise their spending by as much as ten per cent, while only 15 per cent plan to spend less on HR technology.

The focus here is on new functionality such as HR portals, talent management solutions, mobile access services and leading software-as-a -service systems such as Workday.

HR data and analytics, portals and payroll figure in many organisations' investment plans, with one-third of respondents expecting to spend more in the coming year.

In addition, one in three companies plan to make changes to their HR structure during the next 12 months. 

The survey of 1,048 organisations around the world shows that streamlining business processes was the number one initiative for business functions for the second year in a row.

More than half (55 per cent) of those surveyed reported reengineering key HR processes over the past 18 months, while around half (49 per cent) improved line managers' people management capabilities.

Business process reengineering and strategic decision-making are expected to feature prominently in efforts to ensure the HR function remains focused, efficient and effective.

Towers Watson suggests the trend for balance is due to a shift in streamlining business processes and a commitment to running the HR function like a business, with an effective mix of strategic perspective and operational discipline. 

Mike DiClaudio, global leader of Towers Watson's HR Service Delivery practice, said: "Companies are realising the value that consumer-grade technology brings to HR and are willing to make smart investments that can grow and evolve with the business. 

"It also appears that companies are splitting their investments between core HR systems such as talent management and payroll, and next-generation technology including HR data and analytics, and integrated talent management systems."

HR Information

Auto-enrolment is many firms’ ‘biggest challenge’

A new report has revealed many employers view auto-enrolment as the biggest challenge their organisation will face over the coming years.

Auto-Enrolment: Expectations versus Reality, commissioned by Buzzacott Employee Solutions and Meridian West, states that four in ten employers have such a view of auto-enrolment, HR Magazine reports.

Those who have been through the process found it more arduous than expected, the study reveals, with 34 per cent saying it is more time-consuming than they thought it would be.

A different attitude prevails among those who have yet to reach their staging date, however, with 97 per cent confident they will be able to make the changes in good time.

Companies that are yet to reach their staging date need to "take a holistic approach" to auto-enrolment if they want to make it work, according to Amanda Francis, a managing partner at Buzzacott.

Timing is a crucial factor in the successful roll-out of auto-enrolment, the report suggests. Some 77 per cent of companies which have passed their staging date started planning less than 12 months in advance – but many wish they had done so sooner.

According to Richard Phelps, head of Barclays Corporate & Employer Solutions, many small and medium-sized enterprises (SMEs) are underestimating the scale of the auto-enrolment task

"It is thought that to date only two per cent of UK companies have successfully completed the auto-enrolment process," he said. 

"We are at a critical point as SMEs now start reaching their staging dates in large numbers. Reports suggest that many companies are unaware of their statutory obligations."

Barclays and Standard Life are offering support for smaller companies who are yet to reach their staging date, with the next deadline set for July 1st.

The Pensions Regulator recommends employers allow at least 12 months before their staging date to prepare for auto-enrolment.

There is a guide available on the regulator's website to ensure companies are well-prepared for the changes and there is also a tool available for creating an auto-enrolment action plan.

HR Information

Employers ‘could face flexible working application surge’

Employers could face a surge in flexible working applications when the new legislation comes into effect later in the year.

A new survey conducted by YouGov reveals 26 per cent of British workers (excluding sole traders) are likely to request flexible working arrangements, HR review reports.

Some 69 per cent of the working population has never made a flexible working request, with 13 per cent of these reluctant to do so because of the financial implications and nearly a quarter (22 per cent) believing their request would be unlikely to be accepted.

However, attitudes could change when the new legislation comes into force. All employees with a minimum of 28 weeks' service will be able to request flexible working as of June 30th 2014, whereas previously only employees with children under 17 or with caring responsibilities were able to change their working patterns.

The employees most likely to request flexible working are 18-24 year-olds, with 31 per cent of this group considering making a request. Women (30 per cent) are more likely to request flexible working than men (22 per cent).

Croner, a Wolters Kluwer company providing information and consultancy to HR, health & safety and business professionals, commissioned the survey of 2,328 Britons.

Richard Smith, head of employment law at Croner, said: "For SMEs, flexible working will not be the easiest policy to implement, particularly if there is sudden rush of applicants this July. However, once the trust and change of mind set has been established the rewards of a flexible work force will become clear."

The research suggests there are significant business benefits to be had from implementing flexible working arrangements.

Some 27 per cent of those surveyed whose businesses allowed flexible working said it provided a boost to productivity, while 28 per cent said it reduced sickness and absence.

However, 16 per cent of respondents and 19 per cent among the 45-54 age group said it could raise tensions in the workplace.

HR Information

Candidate availability falls ‘at sharpest rate since 1997’

New data reveals the number of applicants available for jobs has fallen at its sharpest rate for 16 years, even as the number of positions continues to grow.

The Recruitment and Employment Confederation's (REC) Report on Jobs, a comprehensive survey of employment trends compiled in conjunction with KPMG, finds that the availability of candidates to fill permanent positions continued to fall during May.

Temporary and contract staff availability also decreased markedly, dropping at a slightly slower rate than April's 13-year record.

The number of vacancies continued to grow, however, despite easing to a five-month low. Permanent vacancies grew faster than temporary or contract roles.

Partly as a result of the increasing scarcity of available candidates, the rate of growth in salaries for permanent positions remained considerable during May.

The Midlands witnessed the strongest rise in permanent placements during May, with the slowest increase recorded in London.

Temporary billings growth was fastest in the Midlands, with the south also enjoying significant increases. There were robust rates of expansion in both London and the north.

Demand for staff in the private sector was significantly higher than in the public sector, the data suggests, with demand for permanent positions growing at a faster rate than for temporary ones in both sectors.

REC chief executive officer Kevin Green said: "The creation of these jobs, combined with the return of job fluidity, is creating a dynamic labour market. However the big issue remains that employers are finding it hard to find the talent and skills they need, yet ONS figures show that we still have 2.2 million unemployed people in the UK."

Mr Green added that the skills shortage has a bearing on the political debate surrounding immigration and the government should reform the visa system to ensure UK businesses are able to grow. He said this would create more opportunities for young people and more chances for career progression.

The greatest demand for staff was experienced in the accounting and financial sector, with engineering dropping to second place despite recording robust expansion.

HR Information

Flexible working ‘could disrupt existing practices’

Flexible working could lead to employee dissatisfaction and administrative burdens if it is not managed properly, the Work Foundation has warned.

Informal flexible working arrangements already exist within many organisations and the new legislation could disrupt the established working patterns, potentially leading to "negative behaviours", says Work Foundation researcher Dr Zofia Bajorek.

The legal right to request flexible working arrangement from employers is to be extended to all employees from June 30th. It has hitherto been limited to employees with children aged 16 or under or a disabled child under 18, or those with a caring responsibility.

Various criteria need to be met before employees become eligible for flexible working – for example, they must have worked for their employer for 26 weeks continuously on the date the application is made.

If approved, the changes permanently alter the individual's contract of employment and employees have no automatic right to return to their previous work pattern. 

However, it is by no means certain that applications will be approved, as employers have the right to refuse requests on business grounds.

These include detrimental effects on meeting customer demands, the quality of work and performance; inability to reorganise work among existing staff or recruit additional staff; planned structural changes; and the burden of additional costs.

Dr Bajorek points out that a recent report by the Institute of Leadership Management, indicated that 94 per cent of organisations already offer some form of flexible work practice.

She argues that implementing flexible working needs to be done in such a way as to maintain the balance between the individual, organisation and employer.

Although there are some obvious benefits to employers who grant requests for flexible working, those on normal contracts may feel a sense of injustice if their workloads alter or tasks are allocated differently to accommodate other employees' requests.

Difficulties may also arise if employers have to deal with conflicting requests from different members of staff.

Dr Bajorek concludes that flexible working could add to a manager's workload and administration and, if managed poorly, could introduce a negative dynamic into workplaces.