Wednesday, March 28, 2012

Measuring the Benefits of a Pay Rise with Human Resources Software

Forward looking businesses already know that using Human Resources software can help to streamline HR processes and implement company-wide HR policies.? But can Human Resources software help when it comes to one of the issues that affects employees the most ? how much they are paid and how they feel about it?

Pay rises are, surprisingly, at their highest level since December 2008 with around 3% being awarded in the private sector and around 2.8% in the public sector. Businesses need to control wage bills, of course; but they also know that failing to reward employees can hurt morale in the short term and damage their business in the long term if their most experienced employees decide to leave. Managing this tension is not easy ? but using Human Resources software can help the process of delivering fair rewards, and of monitoring the effects of pay increases.

The Benefits of Awarding a Pay Rise

With pay rises lagging behind inflation, employers need to consider how to keep their staff happy. This is an issue that responsible employers have to face because it affects their reward, performance and staff engagement policies, and means financial hardship is rising in their workforce. Employees who feel stressed about paying the rent, mortgage, household bills or credit card debts, won?t be giving full attention to their work.

For private sector employers, being competitive is a must, and that means being able to recruit and then retain the talent they need to run the business successfully. But being competitive also means ensuring their fixed cost base does not increase faster than that of their competitors, or faster than their cashflow can support.

Even in today?s tough economic climate employers are aware of the need to reward performance and commitment. Awarding a pay rise can alleviate the threat of losing key and high-performing staff that could be disgruntled by loss of earnings. ?Although by no means rewarding an employee purely by salary will keep them engaged, it certainly helps in the current climate where pay rises and bonuses have been frozen or worse still hours cut.

A well-judged pay rise can assist in keeping staff motivated and feeling that they are valued and have a future with the company. Where the company fails to make the right judgement, this will be seen in increased staff turnover and a reduction in productivity. Where rewards, not only monetary, are effective, companies will see improved staff retention and engagement, resulting in better job performance. Having a method of monitoring and measuring these outcomes allows companies to get the rewards balance right more of the time ? a task which is made considerably?simpler through the use of?Human Resources software.

Using Human Resources Software to Help Decide a Pay Rise

Before you measure the effects of a pay rise, you first have to implement it. But how you implement a pay rise can, itself, produce negative or positive effects. While everyone might initially feel pleased about an across-the-board 10% pay rise, your highest performing staff might still end up feeling undervalued, knowing that the worst performing staff have been given the same pay rise as them. But, if you give different pay rises depending on performance, but based on incorrect or incomplete measurement of performance, there will be employees who will feel undervalued, or aggrieved because they perceive that other employees have been overvalued.

In other words, for a pay rise to be effective in improving motivation and retention it needs, regardless of its size, to be perceived as fair by the workforce. This perception is best obtained by implementing a consistent system of performance objectives, required skills and competencies, and appraisal system to assess how an individual has met these. Human Resources software can help to record and track employee objectives. It can also be used to ensure that a regular system of appraisals is in place, so that employees can be benchmarked against a consistent grading system, enabling a pay rise which accurately reflects performance.

Drilling down to look at reasons for lateness and absence, which can all be recorded and coded using Human Resources software, can give an employer ideas about ways to improve morale without giving a monetary pay rise. For instance, if the location of the business means that it is difficult for employees to get their children to school and be on time for work, the employer might consider allowing some kind of flexible working arrangement. Or if staff leaving the company are citing a lack of opportunity for skill development, an employer might consider bringing in a training programme, or subsidising employees to undertake further study. Basing such non-pay ?rewards? on specific intelligence ? held in the Human Resources software ? allows employers to direct effort or investment towards changes that will be effective.

Non-monetary methods of reward, such as flexible working, opportunities for training, or something as simple as a ?thank you? or acknowledgement of good work, are often more valuable to staff and effective in increasing employee engagement.

Using Human Resources Software to Measure the Effectiveness of a Pay Rise

A good Human Resources software package will record Time and Attendance, including lateness and sickness absence. It will also record any disciplinary issues and staff turnover.

This enables you to analyse whether lateness, absence, disciplinary problems or staff turnover have increased or decreased over the course of a year, or any other point-in-time. Increases in any or all of these problems can indicate issues with motivation and morale, allowing Human Resources departments to address these issues before they spiral out of control.

It then becomes possible to compare one year with another and assess whether a particular year?s pay rise, or improved training for example, was associated with an improvement or decline in any of these measures.

But ultimately, a business will want to know how a pay rise has impacted on the company?s performance. Have performance targets been met, and have identified improvements in sales, service or other areas been achieved? By recording and tracking employee objectives, a company can start to directly assess the value being generated by a particular change to pay and reward structures.

It is also possible to look at particular individuals within the business ? such as high flyers or underperformers ? and see whether their individual performance has improved.

Talk to Teamspirit today about how our Human Resources Software can help to streamline your people policies and processes, and help you make more strategic and intelligent decisions about pay and reward structures.

Source: http://bondteamspirit.blogspot.com/2012/03/measuring-benefits-of-pay-rise-with.html

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