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Emerald Group Publishing Limited
Copyright © 2009, Emerald Group Publishing Limited
The Law Society restructures rewards package
Article Type: Rewards From: Strategic HR Review, Volume 8, Issue 5
Short case studies that demonstrate best practice in rewards
Lorraine JonesLorraine Jones is based at The Law Society.
The Law Society was formed in 1825 and is the representative body for solicitors in England and Wales. Its aim is to help, protect and promote solicitors through activities that range from negotiating with and lobbying the profession’s regulators, government and others, to offering training and advice. As the approved regulator of the profession, the society is also responsible for ensuring that the independent regulator it has established, the Solicitors Regulation Authority, is effective and efficient. It is also responsible for ensuring effective handling of consumer complaints by the Legal Complaints Service. The organization is based in London and the Midlands and employs around 1,400 employees.
As an employer it aims to develop a workforce that is representative of the society it serves and therefore aims to attract the best employees, drawn from the widest possible labor market. In 2007, the society developed its rewards strategy in order to react to changing market and economic conditions and to update its employment proposition. The aim was to achieve a significant culture shift from an “entitlement culture” to one of a “performance culture.” The society worked closely with external advisors, Hymans Robertson and the Hay Group, to identify best practice in developing a new approach to rewards. It also sought the views of employees by carrying out an employee rewards survey.
The development of the new strategy brought a series of changes to the way in which employees are remunerated. Its main objectives are:
To create affordable and sustainable pay and pension arrangements for the longer term – “building a sustainable future.”
To introduce performance-based rewards and end the practice of annual automatic incremental and indexed pay awards, i.e. to reward performance rather than service.
To provide cost effective and value for money benefit provision to reflect lifestyle choices and modernize the rewards package.
To develop new pension provisions and reduce the wide variation in the value to employees of the defined benefit and defined contribution pension arrangements as well as reducing the risk and financial liability.
To engage with employees in the change process.
1 Implementing the strategy
Between 2007 and 2009, the society completed two pay and pension consultation programs with employees. Consultation with all employees was carried out through a Group Employee Information and Consultation Forum. As the organization has a unionized workforce, it needed to work closely with the union and there was also consultation and negotiation with the union, Unite.
There were many challenges to face in the implementation of the new strategy. The society is steeped in tradition and already faced significant organizational change with the separation of its regulation and complaints activities into distinct parts – the Solicitors Regulation Authority and the Legal Complaints Service. In addition, the changes to rewards were to be introduced within an overall limited pay budget, there had been little exposure to variable pay in the organization and there were significant defined benefit pension liabilities that needed to be controlled alongside increases in pay.
2 Extensive consultation and communication
The benchmarking of pay grades showed that the society was at or above upper quartile for most employees. Under the new strategy, upper quartile pay would only be provided for upper quartile performance, with a new pay matrix linking annual pay reviews with performance and current position in pay range and a performance-related annual bonus to reward exceptional performers. These changes meant a complete review and revamp of the existing performance management and appraisal scheme and the organization conducted a substantial training exercise for employees and mangers to help them operate the new performance pay structure.
In addition, a flexible rewards scheme was introduced for all employees. A new 3 percent “flex fund” was offered for the buying of new benefits or to take as cash. There was more focus on the use of tax efficient benefits to help employees maximize take home pay through salary sacrifice and this represented a change to terms and conditions, including the new performance related pay structure. Defined contribution pension scheme benefits were improved and income protection introduced to reduce the disparity between defined benefit and defined contribution arrangements.
An extensive communication process was put in place to support the introduction of the new strategy. In addition to consultation with the employee focus group and negotiations with the union, literature, online information and presentations were available to help explain the changes. The society’s advisors, Hymans Robertson, carried out a series of “drop in” sessions on flexible benefits and salary sacrifice. The CEO and HRD were available to answer questions and there was an e-mail help line to the CEO throughout the process to respond to any concerns or queries. This comprehensive approach paid off for the society, with the following key achievements:
Nearly 100 percent of employees signed up to the new terms and conditions, including performance related pay.
A total of 85 percent of employees participated in the new flex scheme.
The new rewards structure was introduced and met the overall remuneration budget.
Employer National Insurance savings from flex benefits offset the cost of running flex and funded enhancements to the benefits package, including income protection cover and a new discount shopping scheme.
Introduction of a highly competitive defined contribution pension arrangement.
As a business, the society has succeeded in introducing a rewards policy that is based on performance and focuses on individual, team and organizational objectives and achievements. Its new rewards strategy provides greater choice for employees and the opportunity to increase take home pay. The society intends to continuously review its rewards strategy as it strives to become an employer of choice.
About the author
Lorraine Jones is director of group HR and development at The Law Society. She joined the organization in 2003, having previously worked in the engineering, printing and service sectors as well as the academia. Lorraine Jones can be contacted at: email@example.com