In a corporate world that’s increasingly characterised by endless rules and regulations — yet still perceived as unfair by workers — innovative programmes and policies are an important differentiator. Placing all bets on reward simply isn’t a good gamble anymore.
An increasing interest in distributive justice is emerging in the workplace. Employees, and especially millennials, have begun to kick back against what they see as unfair practices. This perspective addresses the ownership of goods in society and assumes fairness in their distribution. In other words, equal work should provide equal outcomes for people in terms of salaries paid and opportunities to advance their careers.
A broad approach needs decisive direction
Broadbanding has attempted to achieve greater equality by removing a chunk of the job and pay grade set out in traditional salary structures: for example, doing away with middle management layers to streamline hierarchy and facilitate internal movement. This is all well and good. But unless flatter organisational structure is supported by formal, structured discussion to help people understand how they can progress, disillusionment and resentment might take hold.
Consider this scenario: two individuals work together, doing the same job that requires the same skills. They’ve been employed for the same length of time — yet they’re paid different salaries. There may be good reason for this pay gap but it’s not articulated or understood.
Whilst many work-centric baby boomers may be more content to make do with these circumstances and move on, at the other end of the career spectrum employees seem less willing to accept the status quo. Quite contrary: they’re ensuring that any sense of unfairness is ratted out in a widespread, social media-enabled way. Clearly, this can have a damning effect on a company’s ability to acquire and keep talent.
Fairness begets more fairness
In direct response to this talent risk, employers have shifted towards job levelling — a process that helps determine the relative value of jobs in the organisation, providing a foundation for clear reward and career pathways. It also allows management to more transparently demonstrate that distributive justice is underpinned by objectivity.
The more an employer is seen as distributively just, the more likely its employees will engage in so-called organisational citizenship behaviour (OCB) — a term used in industrial and organisational psychology. This is a type of behaviour that releases employees’ discretionary effort, leading them to go above and beyond their job description or contractual obligations.
Interest in OCB has increased a lot in recent years. It’s been linked to overall organisational effectiveness, and therefore helps provide the raison d’etre for some of the latest HR developments in terms of employer value proposition and employee experience. The spotlight on this behaviour may have also helped prompt recent corporate governance reform1, and the new emphasis on ensuring employee voice at the board level.
Are there reasonable limits to fairness?
Fairness is great. But relying on a fair reward system alone puts the ability to acquire and keep talent at risk. This is partly because young adults are more interested in a compelling brand and work-life balance than just making as much money as possible.
There’s also the fact that fairness just isn’t as easy to achieve anymore. The retail sector is a telling example. In recent years, companies would perhaps pay £1 an hour more on top the national living wage (NLW) to help recruit and retain people. But if the NLW continues to rise at past rates, by 2020 the pay level for a shop floor worker would exceed that of their line manager, and be similar to the amount earned by their department manager.
How to stand out in a crowd
Beyond salary or wages and basic benefits, competitive differentiation happens by alternative ways and means. Training and development, career progression and profit sharing are just few of the opportunities to more strongly support employees’ physical, emotional, career and financial wellbeing.
Some newer companies, especially disruptive technology businesses, are setting themselves apart by offering their employees a highly flexible lifestyle proposition — blurring the boundaries between work and home life. No doubt, part of the intent is to spark that above-and-beyond mentality by showing employees that the organisation is distributively just.
Companies with plenty of money can achieve this goal relatively easily — for awhile. But sustainability also has to be considered. For any organisation looking to outcompete others in the talent market and deliver a complete employee experience, it’s important not to confuse the contributions of management with economic success and sector momentum.
Compelling actions for establishing a compelling brand and EVP
- Look to reduce the CEO:employee pay ratio
- Demonstrate progression in gender pay ratios
- Include case studies in recruitment literature that model excellence: people connect with personal accounts
- Work with other business departments to define, live and breathe a strong employer brand and EVP
- Ensure reward and career pathways are clearly set out and articulated