Solving your challenges with remuneration

We live in an environment of continued cost-constraints, skills shortage and labour mobility. At the same time, there is pressure to improve productivity, and improve employee engagement.

Companies are looking for new ways to drive value from reward spend and help support the business imperatives. Overlaying this is pressure to respond to changes in the cost of living, inflation pressure as well as the equal pay agenda.

The information to establish the right level of compensation to attract and retain key talent is key to this.

PwC's REMchannel®, Namibia largest online salary survey, allows you to effectively benchmark your compensation packages against the competition and help to inform your reward strategy.

Our latest publication provides remuneration data for 100 Namibian companies covering more than 45 000 data points.

Extracting insight from an organisation's data is nothing new –it's long been seen as important in supporting forecasting and business planning. But data analytics has now become a top priority issue, seen as critical to unlocking future growth, managing cost and decreasing risk.

Data alone is not enough however. There are broader trends around performance management systems and the pay outcomes, pay progression and the employee value proposition.

Here are a few pointers to salary benchmarking, providing a step-by-step layman's description of the lifecycle of the remuneration process.

1. Companies have employees who need job profiles (descriptions) summarising what their duties entail.

2. Each job should be evaluated, i.e. graded to test the complexities of the responsibilities, both internally and externally against similar positions in other organisations. There are several job evaluation tools available for this purpose. We recommend our own REMeasure® on-line system, which can correlate to any of the major grading systems used today.

3. As economies grow, salaries and benefits need to keep in line with this growth, so annual increased are awarded. But providing blanket increases for a number of consecutive years may not be sufficient and competitive when compared to the overall market's salary movements.

4. The development of pay scales, based on market remuneration information and also taking present salary levels into account, ensure that salary increases are not thumb sucked. Believe it or not, this still happens.

5. To explain market remuneration information and salary benchmarking - organisation provide their salary information, to their choice of survey provider, and all these “payrolls” are consolidated into one big pot from which can be extracted data by position, grade, region, industry, gender, age, etc. Choosing a survey house is critical to ensuring you will have access to relevant, current market data.

6. Next, the sample of information in either the national database, or by the relevant industry sector, is then extracted for use of remuneration benchmarking and used to develop a market related pay scale.

7. Once the pay scales are developed, an organisation can compare employee salaries to the revised scale and determine whether an employee 'fits' in to the new scale and calculate the potential cost implications of adjusting employees to align to the pay scale, i.e. to the market related salary.

The implementation need not necessarily happen all at once, a phased approach may be followed over a period of 2-3 years. The alignment or increases awarded should be based on the company's budget, affordability and sustainability of the wage bill.

8. It is important to note that a market alignment of salary scales is a once-off exercise, however benchmarking should be performed every 3 to 5 years to ensure alignment to market remuneration and to ensure the company's remuneration remains competitive to retain the necessary human capital for your business.

It is also important to remember to adjust the pay scale annually with the annual increments provided, if the blanket increment approach is followed. This will ensure the pay scale keeps up with annual increases until the next benchmark phase.

Mari-Nelia (Mimi) Hough is the senior manager of PwC Namibia's reward and benefit consulting services. Contact her at [email protected]