Written by: Morag Phillips and Martin Hopkins
 
What does fair pay really mean?
I imagine that if you asked a group what “fair pay” means, you’ll have a collection of views. If you then asked a group what “fair parenting” means, you’ll have another collection of views. The concept of fairness seems to rest partly in our own experience of the matter under consideration, and it seems that it is very tainted by our own comparison of the application in our immediate context. To step out of pay for a while into the parenting world, a sibling that was allowed to have a smartphone at age 15 may deem it unfair when a much younger sibling received their smartphone at age 12. The sense of outrage that comes with an experience of unfairness makes it a burning issue. It burns brightly when it’s happening to us! 

Fairness itself does not inherently have a bias. The concept of fairness revolves around treating all individuals or groups impartially and without favouritism or discrimination. It aims to ensure that decisions, processes, or outcomes are reasonable, justifiable, and consistent.

Fairness typically refers to the quality of being reasonable and impartial. It involves ensuring that decisions or actions are consistent, unbiased, and considerate of all relevant factors. Fairness often focuses on the process or procedure by which decisions are made rather than the outcomes themselves. For example, in a decision-making context, fairness might mean giving everyone an equal opportunity to voice their opinions or ensuring that rules are applied consistently to all individuals. So is it fair that both siblings got a Smartphone? Does the timing make it different?

Managing pay practices with a focus on fairness, justice, equity, and equality involves understanding each concept distinctly and designing a pay structure that balances these principles. Here’s a breakdown of each concept and how they relate to pay management:

1. Fairness: Fairness in pay practices implies impartiality and lack of bias. It ensures that decisions regarding pay are justifiable and reasonable. Fair pay practices take into consideration factors such as job responsibilities and content, job grade, skills required, and market rates for similar roles. Managers ensure fairness by applying consistent criteria across all employees and being transparent about how pay decisions are made – again, it is the process or procedure, and including measures to mitigate the influence of conscious and unconscious bias.
2. Justice on the other hand, is broader and often carries a moral or ethical dimension. It encompasses the concept of what is right, moral, or just. Justice seeks to ensure that individuals receive what they deserve or are entitled to, based on ethical or legal principles. In a pay context, justice refers to the moral or ethical dimension of pay practices. It involves ensuring that employees receive what they deserve based on their contributions, efforts, and performance. Just pay practices strive to reward employees proportionately to their impact on organisational goals and outcomes. Managers promote justice by aligning pay with performance metrics and recognising employees for their achievements fairly.   Consideration of a living wage for a company’s lowest paid employees is also relevant in the context of pay justice.

In summary, fairness tends to focus on the impartiality and consistency of processes or decisions, while justice is concerned with the ethical or moral correctness of outcomes. Bringing these 2 concepts together, a just pay decision could reward a high performer more than a non-performer; the fairness is in the application and communication of the rules.
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Let’s add 2 more important concepts…

1. Equity: Equity in pay practices involves ensuring that employees receive fair remuneration relative to their contributions and responsibilities, regardless of demographic factors such as gender, race or age, as examples. Equity acknowledges that different roles may have different value contributions to the organisation and seeks to reward accordingly. Managers promote equity by conducting regular remuneration audits to identify and rectify any pay gaps based on unjustifiable factors. An equity audit would be testing whether fairness has been applied. Equity is a reflection of fairness by demonstrating that the outcomes of those decisions result in fair and just        distributions of reward. In this way, equity is an outcome of fairness.
2. Equality: Equality relates to providing the same opportunities and treatment to all employees regardless of differences. In the context of pay, equality would mean paying equal wages for substantially similar work performed by employees. This concept is enshrined in laws and regulations to prevent discrimination based on protected characteristics. Managers uphold equality by ensuring that pay differentials are based on legitimate factors related to job performance and responsibilities, rather than personal characteristics.

Let's use just a few examples:



 
 









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We could ask which factor should be considered the most important. It is indeed possible that pursuit of one element may mean we don’t achieve the other. In this example, we could say there is fairness, but not justice: Imagine a scenario where a company needs to downsize due to financial difficulties. The company decides to retrench employees based solely on tenure, meaning those who have been with the company the shortest amount of time is let go first.

This decision might be considered fair because it applies the same criteria (tenure) to all employees without discrimination. However, it may not be just if some employees who are newer have made significant contributions or have higher performance ratings compared to longer-tenured employees who are retained. In this case, fairness in terms of consistent application of criteria (tenure) is maintained, but justice may be lacking because deserving employees are being retrenched based on a criterion that does not necessarily reflect their value or contributions to the organisation.

This demonstrates that fairness and justice are distinct concepts that can sometimes conflict with each other depending on the context and the specific criteria or principles being applied. Achieving both fairness and justice often requires careful consideration of both the processes used to arrive at decisions and the outcomes that result from those decisions, taking into account relevant ethical, moral, and contextual factors.

To design a pay structure that integrates fairness, justice, equity, and equality, managers can consider the following strategies and practical tools:

• Job Evaluation: Conduct systematic job evaluations to assess the relative worth of different roles within the organisation, using a formal unbiased system; this creates the framework for just and fair decision-making.
• Performance Management: Implement a robust performance management system that objectively evaluates employee contributions and ties rewards to individual and team achievements. This creates defensibility for just decision-making.
• Internal pay audits: Consider your internal pay patterns and any discrepancies that indicate equity issues.
• External market benchmarking: Regularly benchmark salaries against industry standards to ensure that pay rates are competitive and aligned with market trends, to inform your own unique pay structure.
• Transparency: Maintain transparency in pay practices by clearly communicating the criteria for determining salaries, pay increases, and bonuses to employees.
• Regular Reviews: Conduct regular reviews of pay practices to identify and address any discrepancies or biases that may exist, ensuring that pay differentials are based on legitimate factors.
• Training and Awareness: Provide training to managers and employees on pay equity principles and practices to promote understanding and adherence to fair and just pay standards.

By integrating these principles into the design and management of pay practices, managers can create a pay structure that not only attracts and retains talent but also fosters a culture of fairness, equity, and respect within the organisation. An important ingredient is the deep consideration of unintended consequences and testing whether all 4 dimensions have been considered.

In summary, while fairness focuses on the fairness of procedures and decision-making, equity assesses whether those procedures result in fair and just outcomes. Together, fairness and equity aim to promote a more just and equitable society or organisation where everyone has equal opportunities and access to resources based on their circumstances and contributions.

As we close, a challenge to our industry is to see the determination of an organisation-specific living wage as a decision sparked by justice, supported by fair policy, and resulting in an equitable outcome.

Morag Phillips is a Master Reward Specialist, a SARA Executive Committee member, Chair of the SARA Thought Leadership Committee, and a member of the SARA Conference and Reward Awards Committee.
Martin Hopkins is a Master Reward Specialist, and a member of the SARA Thought Leadership Committee, and Head of Reward Advisory Services at Bowmans Law.

ENDS

MEDIA CONTACT: Idele Prinsloo, [email protected], 082 573 9219, 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  

At the recently held 2021 Reward Awards ceremony hosted by the South African Reward Association (SARA), Openserve won the Reward Project of the Year award while ABSA won the Remuneration Report award for the second consecutive year. 

Morag Phillips won the prestigious President’s Award. 

The annual rewards celebrate the companies and professionals who design total reward solutions that attract, retain, motivate, and engage employees in a way that makes a difference to their organisations.

Reward Project Award
The 2021 SARA Reward Project award recognised the team from Openserve for their Heroes Employee Recognition Project. The project recognises employees that go beyond the call of duty in providing excellent service to Openserve customers.

The process is employee-driven and administered via the Openserve Heroes portal, where individual employees are nominated weekly. Due to the basic setup of the portal, no management intervention is required, and there is little to no overhead in administering the system. Weekly and monthly winners receive a personal call from an Openserve Exco member congratulating them on their Hero status.

The annual process culminates in a virtual breakfast with the Exco and the monthly Hero winners. In the first cycle, the CEO announced a surprise gift of a weekend away with partners for all the monthly winners. There has been a healthy adoption rate among employees and key indirect business performance metrics all show pleasing improvements.

The other placed nominees of the 2021 SARA Reward Project of the Year award were Mr Price Group in second place for their Flexible Retirement Benefits implementation project, and Bridgestone South Africa for their Total Cost to Company migration project.

Remuneration Report Award
The winner of the 2021 SARA Remuneration Report of the Year award is ABSA. Goldfields received 2nd Place and Anglo American Platinum Limited received 3rd place for their submissions. 

This award recognises organisations for the alignment of their remuneration reporting and disclosure, against the key principles of the King IVTM governance guidelines which exemplify fair, responsible and transparent policy and practice.  Submissions were evaluated by a panel of independent and expert judges across all spheres of stakeholders. 

President’s Award
A special President's Award that honours outstanding achievement in the field of total reward was awarded to Morag Phillips from 21st Century.

Morag has served the South Africa Reward Association over an extended period. She continues to contribute to the value that the association creates for its members by chairing the Thought Leadership Committee, and previously the Conference committee and also makes herself available as a Mentor on the Mentorship programme.

She has written many articles and spoken at numerous conferences on HR and Reward matters and is viewed as an industry specialist and leader in her field.

Morag is an integral part of the leadership team that ensures SARA continuously innovates value adding services to members. Morag’s inner strength, inputs, and research have enabled the SARA Exco to optimise the diversity of its members.

The association is honoured to acknowledge Morag’s invaluable contribution to the profession, our community, country, and continent at large.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 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

South African companies implicated in the Guptagate scandal find themselves facing a bleak future. With their reputations in tatters they risk losing the vital human resources they will need to recover, and one of their most pressing challenges is to restore employee morale and engagement.

“People do not go to work just to earn money,” says Morag Phillips, Director of 21st Century and Exco member of the South African Rewards Association (SARA), a professional body focused on promoting transparent, fair, and responsible pay practices.

“Their deeper motivations derive from the impact their work has on their feelings of self-worth and their desire to be part of something that makes a positive impact on the world –this is what drives employee engagement and energy, and builds successful companies.”

“During times of crisis, employees begin to worry about the organisation’s continued existence, their own reputation due to association risk and, of course, become targets for competitors on the lookout for talent.”

Ms Phillips advises that companies finding themselves in this situation have to undertake a rigorous process of restoring the internal organisational culture in tandem with efforts to repair the corporate brand externally. If there is a lack of internal focus – displayed through staff dialogues, support programmes, and evidence of continued job security – they might find themselves in the short to medium terms without their most important intellectual capital.

Start with understanding the true culture
Chances are that a crisis such as Guptagate would deepen any cracks that might exist in the corporate culture. It is therefore critical that corporate leaders should begin the process of consolidation and healing first by analysing the status quo honestly. That means, she says, looking behind the façade to see what employees are genuinely feeling.

“Corporate culture is driven and influenced by the leaders in an organisation, and management must play a guiding role in making it a day to day reality,” she says. “They need to find out what employees love about what they are doing, and build from there.”

Companies should undertake an active process to get input from employees about what motivates them about their jobs and what they do, along with what they love – or loved – about the organisation. If employees are involved in the process of defining the current culture, they will sign up more readily to keeping it healthy.

“We often ask ‘what are our shared values’, but a better way to frame this question might be ‘what do you want your every day to feel like’,” says Ms Phillips.

Involve more than appointed leaders
Another important action point is to identify those individuals who are influencers within the company, and make them part of the process.

“Management needs to listen to and understand what employees are thinking and saying around the proverbial water cooler, and get influencers on board to change conversations that do not fit the desired ‘flavour’ of the company.”

View company culture as strategic imperative
Ms Phillips believes that the campaign to regenerate the corporate culture should at all times be seen as a business imperative driven from the top, not a reactive feel-good campaign run by HR.

“It’s all baby steps,” says Ms Phillips. “Generate a little bit more positivity, and it could turn into renewed confidence, which could turn into a few more deals, a few more months of employment. These small steps then turn into a whole new chapter that grows into a whole new story.”

“The mistake that prompted the crisis has to be seen by everybody as an event that occurred, and not necessarily a signifier of the company’s culture,” she concludes. “That can only be done by understanding what the culture actually is, and how it needs to change if the same mistake is not to be made again.”

ENDS

MEDIA CONTACT: Juanita Vorster, 079 523 8374, [email protected]

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

At the 4 November 2017 Reward Awards ceremony hosted by the South African Reward Association (SARA), AngloGold Ashanti won both the Reward Project and Remuneration Report categories. Peet Kruger received the prestigious President’s Award.

“To be a top reward professional in South Africa, individuals need to have a mix of innovation, business acumen and technical expertise in the financial and non-financial aspects of pay,” explains Morag Phillips, Exco member of SARA, a professional body focused on promoting, developing, and empowering reward professionals and practices in South Africa.

“The design of an effective reward structure is crucial for organisations that want to attract, retain, motivate, and engage the employees that are best suited to helping the organisation achieve its goals.”

Remuneration Report Award
The Remuneration Report Award recognises organisations for how well they have demonstrated compliance with the King III principles through clear and concise disclosure of the company’s remuneration philosophy and its application. The King IV™ Report was published on 1 November 2016 and effective in respect of financial years commencing on or after 1 April 2017, and therefore not applicable to the submissions received for this year’s awards.

A panel of judges evaluated nominations against the principles of King III and considered how organisations are demonstrating the broad principles of transparency, fairness and responsible pay decisions.

Specific focus was given to how organisations report on the remuneration detail, including fixed and variable pay.

“As well as adhering to the requirements of legislation and corporate governance principles, the winners displayed evidence of a commitment to best practice in reward principles,” says Phillips. “Submissions were also evaluated based on the communication of how the company’s approach to remuneration supports its business strategy, and aligns the interests of its executives with those of its shareholders.”

Special commendations were made to Sasol and Aveng for their submissions, with the winner of the Remuneration Report announced as AngloGold Ashanti for striking a balance of sharing details in an interesting and informative way, and creating a very clear impression of the AngloGold Ashanti remuneration strategy.  There is a very clear link across business strategy, reward strategy, performance targets and performance payments.

Reward Project Award
The SARA award for the Reward Project of the year recognised a team who have been responsible and actively involved in the development and implementation of a new reward project. The winning nominees of the 2017 Reward Project of the Year Award was Anglogold Ashanti in first place, Avbob in second, and Gautrain Management Services in third.

AngloGold Ashanti was congratulated for their new share plan as a profound new approach to incentive remuneration. The approach follows feedback from shareholders to better align the interests of the company management with those of shareholders.

President’s Award
A special President's Award that honours outstanding achievement in the field of reward was awarded to Peet Kruger for his outstanding contribution to the profession over many years.  Kruger was one of the founding members of SARA in 1997 and has been instrumental in many of its activities, including starting the Reward Awards.

“By continuing to host the Reward Awards, SARA hopes to highlight pay practices that adhere to good governance and industry best practice,” says Phillips. “We hope to inspire reward professionals to always aim for transparency, fairness, and responsibility in determining how employees and executives are rewarded for their effort.”

ENDS

MEDIA CONTACT: Juanita Vorster, 079 523 8374, [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