Stronger remuneration committees are the solution to rampant executive pay. This is according to Laurence Grubb, Master Reward Specialist and Executive Committee Member at the South African Reward Association (SARA).
 
"We're seeing an imbalanced power dynamic between high-performing executives who associate significant rewards with the value they deliver and RemCos with structural expertise gaps that cannot assertively counter their demands," he says. 
 
Grubb suggests that alternative remedies are likely to do more harm than good.
 
The danger of a binding vote
The majority of South African businesses try to abide by the King IVTM code of corporate governance to achieve balanced and appropriate outcomes for executives, shareholders and other stakeholders.
 
Yet, some CEOs, CFOs and executives continue to extract excessive remuneration from their companies. However, they have often built the enterprise from scratch or led it to significant growth, making them key to their company's success. So they may control the balance of power with a Board and Remco not willing to cross them.
 
One suggested approach is to afford shareholders a binding vote that could deny gratuitous executive rewards, but Grubb says this is risky.
 
"These leaders are the drivers of the business's growth and if their expectations are not met, they could move on and leave the Board to find a suitable successor, the impact of which will normally be a decline in the share price" says Grubb, noting that similar scarce talent might be impossible to find. Consequently, shareholders may end up shooting themselves in the foot.
 
Rethinking the RemCo
A better solution is to equip the RemCo with the necessary expertise to rationalise, negotiate and even restructure proposed packages in a way that satisfies of all parties. This requires that the committee augments its competencies with a deeper knowledge of current remuneration trends, industry standards and competitive best practices.
 
To facilitate this solution, SARA is developing masterclass webinars and live sessions aimed at RemCo members, as well as other executive and non-executive directors, to enhance their understanding of executive remuneration. In addition, King IV suggests that the committee invites an external advisor to guide it in its duties.
 
Executives will often hire remuneration consultants to help them determine the highest reward opportunities for their position. Their justification for greater compensation will be informed by data, industry benchmarks and practices and broader insights. RemCos without similar independent expertise will be left at a disadvantage.
 
"In an ideal world, King IV might recommend a Master Reward Specialist as a standing member in all RemCos, allowing them to bring remuneration expertise, independent views and industry best practices to the negotiation," says Grubb.
 
A real solution
While most South African businesses have roped in runaway executive earnings, some executives continue to enjoy astronomical rewards.
 
Many proposed solutions – like more onerous regulations or a binding vote for shareholders – may have unintended consequences which would prove to be negative in the long run.
 
"The only real solution is to empower remuneration committees to do the job they were created to do," says Grubb. Most of all, they must be able to challenge the CEOs and executives who, up to now in some companies, have retained the balance of power in their struggle for greater rewards.
 
ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, [email protected], 060 995 6277, www.atthatpoint.co.za 
 
For more information on SARA please visit:
Website: www.sara.co.za 
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association

Moving from remuneration to employee experience
"In today's competitive job market, organisations that wish to attract, retain and motivate the best employees, need to incorporate employee experience management into traditional remuneration," says Muhammed Goolab, Senior Reward Specialist and exco member at the South African Reward Association (SARA).

A new perspective
While traditional remuneration packages will continue to be the foundation for attracting critical talent, modern job seekers are looking for more than money and standard benefits. In addition, they want purpose, support and fulfilment in their work.

This has been particularly important for millennials who value flexibility, life experiences and freedom to act. They are also a generation with strong social awareness and the image that organisations project both internally and externally is especially important to them.

This trend requires that employers change the way they think about rewards. Instead of hiring against what talent their business operations need to keep running, they should start focusing on the people who drive those processes forward.

"If you take care of your people, they will take care of your company," says Goolab.

What is employee experience management?
Employee experience management (EXM) is about creating a good first and lasting impression from the time a prospective hire reads your job ad, during the recruitment process, throughout their onboarding and journey with your company, and right up to the day they leave.

That's because, these days, even your farewell process is open to scrutiny on social media, where word of poor employment practises gets around quickly.

EXM is not only concerned with employee wellbeing and workplace comforts but embraces a holistic, multifaceted approach to overall employee satisfaction, forming a more complete total reward offering.

This can include employees identifying positively with your brand, recognition of their achievements, whether or not you use the latest technologies and your level of innovation, your societal values, the company's leadership, work-life balance and flexible working arrangements, skills development and career progression, and more.

"In a post pandemic world, it will be important for employee experiences to translate well and cohesively outside of the physical office and into work-from-home and other flexible arrangements," says Goolab.

Why EXM?
EXM is part of the larger experience management (XM) function within modern companies, which includes employee experience, customer experience, product experience and brand experience. In bigger organisations, XM is led by the Chief Experience Officer (CXO).

Research shows that employees who enjoy good experiences at work contribute positively to a better customer experience, resulting in increased revenues and an improved financial position for their employers.

So while EXM is a concerted effort to better attract, retain and motivate skilled employees, it holds proven strategic benefits for companies that implement it.

Rather than a rigid checklist of to-dos, EXM is a dynamic management function akin to internal marketing or PR, aimed at convincing staff they chose the right employer. At the same time, it must develop real experiences that workers truly value, so frequent employee engagement is a must.

"Employers can no longer simply outbid each other because the currency of a new generation of employees is values they can relate to and respect for their needs as human beings," says Goolab.

EXM and reward professionals
Whether an organisation has an EXM function or not, its reward professionals will inevitably be involved in or responsible for employee experience development.

"Reward practitioners are ideally positioned to help employers craft a strong employee value proposition that expresses worker expectations as well-defined and meaningful experiences," says Goolab.

Enterprises that adopt this new approach to reward will have a competitive advantage over employers who continue to focus on redundant ideas about what employees really want from their jobs.

ENDS

 
MEDIA CONTACT: Rosa-Mari, 060 995 6277, [email protected], www.atthatpoint.co.za 
For more information on SARA please visit:
Website: www.sara.co.za 
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association

The Covid-19 pandemic has brought about the most flexible period in terms of employment and remuneration practices ever experienced.
 
Companies reacted swiftly to the impact of the pandemic on the workplace and their ability to pay and retain staff. This has never happened in the past, says Yolanda Sedlmaier, Chartered Reward Specialist and executive committee member of the South African Reward Association (SARA).
 
Companies who were already struggling pre-pandemic, paid lower incentive bonuses to their executive and pay increases across board ranged between 0% and 5%.
 
Moral approach
However, Covid-19 brought about a far greater moral approach to executive pay and incentives. For many companies, bonus payments for past performance (pre-Covid-19) were put on hold, delayed, cut or reallocated from May last year.
 
“Many companies opted to reallocate some of the money into a company fund to assist staff who ran out of leave and were not able to return to work because of the hard lockdown during the initial stages of the pandemic.”
 
Sedlmaier says the same happened in terms of leave. Companies requested employees who had a lot of leave to sacrifice it in order to allocate it to people who ran out of leave during the hard lockdown.
 
Some companies actually benefited financially due to the pandemic, such as telecommunication and pharmaceutical companies.
 
The demand for computers, data and airtime soared as people shifted from the company office to the home office. Several tech companies were in the position to continue paying their staff as usual, including bonuses. 
 
“However, several were circumspective in terms of paying bonuses or giving increases, as they felt a moral obligation not to do so while thousands of people were losing their jobs,” says Sedlmaier.
“We are seeing more of that this year. Companies who were still paying bonuses in March last year were more circumspect this year. Covid-19 has certainly impacted on the morality of paying large bonuses in difficult times,” she notes.
 
Retention measures
Company executives were “expected” to take pay cuts for a period of at least three months last year, and in some cases the period was extended.
 
Other companies offered all staff a three-month unpaid sabbatical or offered them reduced pay for reduced output.
 
Many companies are quite wary about the possible impact of the third wave. Some have started increasing the number of people working on-site again, but with the third wave they experienced an increase in Covid-19 cases and are re-evaluating these arrangements further.
 
Although there has been a slight pick-up in economic activity recently, the third wave is affecting everyone. “There is a possibility for more job losses,” says Sedlmaier.
 
Future trends

• Companies will remain a lot more flexible in future. Many may keep a core staff compliment, but take on more contract workers as the need arises;
• They will allow for more job sharing where two people take salary cuts and share one job;
• Companies will allow people to continue working from home; and
• They will remain flexible on pay according to the hours worked or output delivered.

 
ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, [email protected], www.atthatpoint.co.za 
 
For more information on SARA please visit:
Website: www.sara.co.za  
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association 

The way an organisation rewards its employees is critical to overall productivity and the success of the business. Reward management must therefore link directly to the changing needs of organisations to ensure that employees are suitably aligned.
 
This is according to Peet Kruger, Executive Committee Member at the South African Reward Association (SARA). “The biggest assets of any business are its people and business needs to keep in mind that the way they reward people has a direct effect on how business goals are achieved.”
 
Total Reward management takes into account more than just base pay; it also looks at what people need to be productive and positive in a fast changing work environment, especially with technology significantly changing the way organisations do business.
 
It is thus critical that Total Reward professionals – those individuals responsible for creating effective Total Reward value propositions for employees – remain on top of industry trends and get advice and support on how to successfully navigate the minefield of challenges faced due to the changing landscape of business. One such way is by attending the annual conference of the South African Reward Association, taking place on 3 and 4 November 2016.
 
“Even though we have easy access to information these days, it is important that reward professionals attend this important industry conference,” say Kruger. “Attending the event and learning about the latest trends and how they are impacting the industry and are being exploited for maximum benefit expands your knowledge base and gives you something valuable to take back and apply to your own work environment”.
 
Delegates can expect to participate in discussions around future trends and changes affecting Total Reward practices from a variety of leading reward practitioners including those considering new ways of approaching performance management.
 
Performance Management – No middle ground
Once seen as a key driver of employee productivity, business leaders are now starting to consider conventional performance management systems as ineffective, too expensive, time-consuming and often demotivating.  In recent times we’ve seen companies such as Telkom, ICASA, SAP, Adobe, Sears, Microsoft and others either drastically revamping their traditional processes and systems or moving towards cutting-edge and integrated performance management systems.
 
“There is a lot of talk around alternatives to key elements of the traditional approach to performance management and one of them is around reviewing the ratings-based system,” says Dr Bussin, Executive Committee Member at SARA and Chairman of 21st Century. “If you get rid of ratings, then the business becomes a rating-less environment. Of course, the line managers may be delighted by the notion of not having to rate their people, but HR is often baffled by the impact of this. There is therefore one very important question that needs answering before everyone jumps onto this ship – how do you create a solution which assesses performance without a ratings-based system and still enables a business to comply with legislation such as South Africa’s Employment Equity Act?”
 
“There still needs to be a way of managing the relationship between the employer and the employee, to direct their efforts towards what the organisation and the individual want to achieve,” agrees Lindiwe Sebesho, SARA president and a panellist at the 2016 SARA Conference.  “Whilst various studies have proven that traditional approaches do not work for many businesses and employee profiles, Reward professionals need to ensure they adopt appropriate approaches from the best practice trends and clearly define the objectives of their performance management practices. Instead of a “one size fits all” approach, is it possible to consider hybrid models that enable flexibility and empower both managers and employees in different types of businesses to optimally contribute towards business success?”
 
Facilitated by Dr Bussin, the panel discussion is set to examine these questions using insight and active engagement to address the issues from every corner. Panellists include John Ludike, an Independent Strategic Talent & HR Consultant, Nhlamu Dlomo, Executive Director: HR and Advisory Partner, KPMG and SARA President Lindiwe Sebesho, who is Head of Performance Management and Recognition at Barclays Africa Group Limited.
 
Prof Robin Snelgar, HOD Industrial and Organisational Psychology, NMMU, will also touch on the question of whether excessive rewards lead to decreased performance.
 
Managing the talent of tomorrow
“New insights from neuroscience on what really drives people and how to create environments in which they can thrive along with the technological tsunami and changing social world are impacting on the role of Total Reward professionals.” explains Marie-Claire McLachlan, Executive Committee Member at SARA and Director of CultureCode.
 
“In this VUCA (volatile, uncertain, complex and ambiguous) world, with its forever changing landscape, complexity and stress is on the rise. Total Reward professionals need to better understand how to create “brain-friendly” work environments in order to better engage people and enable a ‘toward’ state in which people can  access the parts of the brain which are needed to collaborate, co-operate and tap into creative thinking and problem solving abilities. The question is how – the answers are at the event.”
 
McLachlan will be examining the topic of Rewire for Change and a New World and the impact of change on how people perform and engage with the organisation.
 
For more information on the 2016 South African Reward Association Conference taking place on 3 and 4 November 2016, visit http://bit.ly/SARAConf2016

ENDS
​
MEDIA CONTACT: Cathlen Fourie, 012 644 2833, [email protected], www.atthatpoint.co.za  

For more information on SARA please visit:
Website: www.sara.co.za  
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association ​​​​​​​