I read the BIFM Pay and Prospects survey last week with great interest. I spend (probably) an unhealthy amount of time reading reports and articles on pay trends, from the ‘gig economy’ to apprenticeship levies to public sector pay rises. There is not much I haven’t read.
Having been an employer, an employee, a shareholder, a business owner, an equity director and a NED. I have held most roles and for me irrespective of the job, pay is vitally important, right up there with oxygen, but maybe not for the most obvious reasons.
Over the past couple of years, I have seen a lot of change. The great debates over the new national minimum and living wage and this month, the changes in taxation which has boosted people’s personal allowances and positively impacted individuals take home.
It is ultimately a moving feast and a confusing one.
The pay balancing act
The big news stories (Russia and nerve agents aside) have been about the demise of the high street with a particular focus on restaurant chains like Byron, Prezzo and Jamie’s Italian. Some shops like Maplin have blamed the national minimum wage and rises in business rates for their organisation’s demise, as for most organisations pay is the single biggest opex item in their accounts. Unsurprisingly, when a company is in distress and needs to appease shareholders, then taking a machete to the workforce is the first thing that a management team will do. Keep a lid on pay, stop hiring, cut cost and do it fast.
Talk to any employee engagement specialist and they will say that the most emotive topic at work is pay, followed by training, straight-forward communications, progression, a clear business plan and so on. I know from personal experience how to get pay wrong. I spent some time with a firm a few years ago who had a curious approach to pay rises – it would always start with an apology and lots of reasoning why the person on the receiving end of the pay rise or no pay rise wasn’t going to get what they hoped for. The oddest thing. No-one would come out of that review feeling great.
To get the balance right on pay is tough. Paying enough to attract and retain your talent is the starting point but then to reward and recognise good to great performance and lastly as an external barometer on how you value your people. Get it wrong and the shadow it casts is long and unrelenting. We can probably all name half a dozen firms or sectors that have a reputation for poor pay and I bet you can name a similar number that have a great heritage in paying well.
The BFIM survey
So back to the latest BFIM Survey, I like it because it focuses on individuals who are going through their qualifications or have achieved them. This means they are committed to the sector as an industry and as a career.
Is pay important? As I said I put it up there with oxygen because it says how people value your contribution to the wider organisation. This can be partly on a personal basis but in larger organisations it tends to be more about that job profile than the holder of the job. What did the survey say….. 58% of respondents said that pay was their number one factor at work. So pretty important.
Alongside feeling rewarded, it is important that individuals believe they are backing the right horse in the race. That means that the firm that employs them has the right leadership team and the right business plan, this provides hope in the future. Interestingly whilst there has been an increase in the number of people not getting a pay rise, 77% of respondents expect a pay rise in the coming year. That sounds massively encouraging. A sharp jump in respondents expecting to resign in the coming period says that both people are confident of their opportunities in the sector plus confident that they can improve their personal circumstances including of course, pay.
Broader than just the Workspace sector, what is going on? If you cast your eye at the Construction sector the coming year shows expected pay increases of between 3% in Wales and an astonishing 16% in the Midlands. These are huge jumps that will surely drive prices only one way.
So where should you focus as an employee or employer? Here are the big topics to ponder….
- Nearly all firms within Workspace, Construction and building expect activity to increase in the coming year, could be optimism but I think is based on reality.
- 75% of firms expect to recruit brand new heads
- The on-going challenge of the skills shortage is the top recruitment issue
- Salaries will go higher as the squeeze on skills and headcount combine to create pay inflation
- Career progression and a compelling story to the wider market will determine your and your firm’s success
In short, people and organisations need to invest in themselves and their people to address skills shortages and to ensure that you have the right people in the right place at the right time. As I said a few times, pay is so important in addressing these issues. What Formation and other resource providers can deliver in flexible resource will become more pivotal in filling in these gaps when you just don’t have the balance quite right.
We are in for an interesting time…..