Executive Reward: World-class pay in New Zealand

Our company conducts much of its core business in two of the “hard” areas of human resources; the nature and structure of jobs, and the pay attached to those roles. It is serious focus and as we work with our clients to improve their systems we are constantly reminded of the difficulties faced.
Pay is often contentious issue; the pull between internal and external relativities, its affordability for the employer, the existence of entitlement cultures, and individual performance and its measurement, are factors that have role in determining levels of remuneration.
Individual employers and employees are often at odds as one party puts emphasis on only one or two of these factors. In addition, the above list is not exclusive as other factors are sometimes important. Does anyone ever get it right? Is it possible?

From our perspective we do see the occasional ‘oasis of calm’ in what is often ‘desert of discontent’. To say that such peaceful areas are widespread or even spreading would be an exaggeration but they do exist and organisations can address these issues directly.
One example is in the Not for Profit sector, particularly those operating in the social welfare space. Not all NFPs in this subgroup, I would quickly add, but we do see from clear signals that many/even most of the issues around pay have been minimised even eliminated. And these are organisations that generally pay lower in the market than the private sector or large parts of the public sector.

Why is this? What do they know that much of the rest of the economy struggles to get right? Our consulting work and research suggests it is mixture of good communication, widespread and clear understanding of the organisation’s financial limits, commitment to the job and high levels of job satisfaction, clear knowledge that overall pay levels are lower at the time of recruitment, empathetic and flexible employment practices generally, and focus and awareness of the needs of individual employees. Often these organisations have flat organisation structures, also lending itself to good communication.

Note the issues that perennially surface with pay are absent; alienation within the job is not there or minimised, the affiliation of the individual to their employer has strong and committed bond (“we are in this together because we all believe in what we are doing”), and the sense of pride as to the value of the work they are doing is extremely high.
For this sector I suggest this is clear example of world-class practices with respect to pay. It’s not necessarily applicable to other sectors, but it does show that even in the most difficult environment progress can be both real and long lasting.

A study of 32 chief executives of NFP organisations will be published shortly by Strategic Pay. It demonstrates the commitment senior executives in this sector have and emphasises the points made in this article. Data from our long running survey of pay levels for this sector will show the relatively low levels of pay of the most senior roles. Of course, it doesn’t escape us that pay for this group of top executives may attract different sorts of comments compared to some other groups in the economy. M

John McGill is chief executive officer of remuneration and performance development consultancy Strategic Pay.

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