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Mark Childs

the Total Reward Group


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Short on rewards – an HR skills crisis


It would be hard to miss the steady growth in demand for reward professionals.

Interest in their skills began with a handful of FTSE 100 businesses back in the 1990s, but the job title of ‘compensation and benefits director’ was a rarity at that time.
Today, however, there are a lot more reward roles advertised and it would be hard to find a FTSE 250 company without one. The willingness of a greater number of businesses to trade internationally has only added to demand, with organisations wanting to know how best to reward talent fairly and consistently across borders.
More recently, the coalition government’s focus on transparency and good governance in the public sector has also spilled over into interest in reward skills here too.
An increasingly complex regulatory environment is another driver. The Greenbury Report of 1995 sought to address growing concern over directors’ pay and put in place new disclosure requirements around executive remuneration.
More recently, following the onset of the credit crunch, which prompted the introduction of new remuneration rules from the Financial Services Authority and brought many more companies under its regulatory control, there has been considerable growth in demand for expert reward skills within the financial services sector.
What this all means is that specialist reward know-how is now a hot area. Reward is no longer the number-crunching extremist wing of the HR profession. Instead high levels of knowledge about complex taxation, social security, share scheme, pensions and employment legislation needs to be combined with the necessary analytical skills to make sense of it all.
Scarce supply
There is likewise an abundance of salary and bonus planning software to be mastered today and even more on the immediate horizon over the year ahead, with pension auto-enrolment coming into force for many large companies in October.
The problem is, however, that, not only are reward professionals in demand for good reason, but their skills are also currently in scarce supply. Should an employer advertise publicly for a reward analyst at the moment, they are likely to receive few, if any, applications.
The challenge for the industry is that, although the body of knowledge and skills required to undertake the job is growing, well-trodden paths for reward training are fast disappearing.
The Ulrich model for HR, which focuses on senior professionals operating in centres of excellence, leaves little scope for training fledgling reward professionals. In the past, the latter would have started out in a generalist HR department, before choosing to focus on reward as their career path.
But the development of outsourced HR service centres has deprived many junior HR professionals of the opportunity to learn the mechanics of pay, rewards and benefits.
The good news is that there is now a growing cohort of young professionals who have seized back the initiative by choosing to specialise in reward more or less at the start of their careers. In many cases, they are attracted to it because they have already decided that they prefer the structure, focus and continuity provided by opting for this specialism.
This group are well-placed at a challenging time for many young professionals: demand for their services is such that even basic on-the-job experience in tackling benchmarking and salary cycles will help them to develop their careers and salaries rapidly. The difficulty that they face, however, is getting hold of the practical and specialist training that they require, particularly when learning and development budgets are tight.
The options
So what are the options? The first thing for senior HR decision-makers to do is consider the impact on the organisation if they were to lose existing reward skills, not least because they are both difficult and expensive to replace.
Luckily, however, most professionals at an early stage in their career are keen on receiving support in their professional development. If they know that their employer is committed to such an investment, it is clearly a major incentive for them to stay.
From the employer’s point of view, developing a new learning path at a time when earnings growth is suppressed not only helps them to attract people looking to start a career in reward, but it can also help to retain them.
The frustrations experienced by many employers over their inability to either secure or retain reward professionals have already convinced them to ‘grow their own’, perhaps by employing the expertise of specialist training providers.
But such training needs to be part of a well- structured learning programme and should be phased in delivery terms. There should also be some degree of contractual ‘lock-in’ included in the arrangement in order to prevent staff poaching by competitors.
Another option that can be introduced at the same time, meanwhile, is to offer reward professionals the stepped salary progression commonly seen in other professions where the skills and/or qualifications that they acquire results in an increase in their market value. For example, partly-qualified accountants enjoy a premium relative to their unqualified counterparts so why shouldn’t the same be true for reward professionals?
Many employers fear that they will have to pay through the nose when hiring reward skills. So why not keep high-quality reward professionals in their organisations by simply recognising that implementing a phased approach to salary growth can be less expensive than losing them?
Reward professionals are becoming their own breed – they are in short supply, require training and would benefit for having their own salary structure. With a proper investment in training, the best will not only mature, but hopefully move away from a purely back-office orientation to become front-line reward business partners, which will be of benefit to everyone.
Mark Childs is a director of reward services provider, the Total Reward Group.
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Mark Childs


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