We’re all very aware of the pandemic’s impact on how we work, but could it transform how we get paid too? Ken Charman, chief executive at Unilever spin-out uFlexReward, believes so.
Here, he explains why he thinks companies will be “pressing the button on radical changes” this year.
Towards a metered working model
“If we change something as huge as not having to come into the office, are there other aspects of the employer-employee contract we can change that we all thought were fundamental?” Charman asks.
Moving away from the traditional five-day week could be on the cards, he says, as could adopting a system that doesn’t classify work by a profession or a “rigid job description”, but rather by the skills that can be contracted for a particular project. Charman calls this a “metered working model”.
“Metered work is where organisations pay for much shorter time units than the old-fashioned annual salary or a day rate,” he says. “Where everybody, including people already employed by an organisation, has a value that relates to their skills and level of experience of those skills.
‘The idea is to retain talent with critical skills, rather than simply trying to get away with paying as little for labour as possible’
– KEN CHARMAN
“With businesses trying to move away from grade hierarchies and rigid job descriptions, skills will become an essential new commodity in the market for talent.
“A constantly updating catalogue of skills will be matched to a ‘schedule of rates’, essentially a price register for skills that is updated in real time to reflect the spot market for talent and experience, allowing organisations to build small teams of people whose skills between them can complete a project.”
However, Charman emphasises that careful thought and planning is a must: “Given that this shift to the future of work is primarily the result of an 11-month remote working model, implementation could be rushed without going through the appropriate due diligence.
“Just because many were forced to adapt, doesn’t automatically mean these are the right changes to implement. Despite how progressive they may appear, these trends towards performance-related pay systems pose a potential threat to the pursuit of pay equality, as well as raise some serious tax issues.
“For example, if organisations can simply select labour based on the lowest cost to the organisation, how can they ensure an equal representation of women and minorities are applied to each project?”
Can we really ‘work from anywhere’?
While working from home has become the norm for most employees in the past year, some have started to eye up ‘working from anywhere’.
And though businesses are adapting to their staff members’ changing needs, Charman advises against rushing to a new home beyond the big city in the hopes of saving on rent.
It’s important to remember that salary rates are location-dependent, he says, which means they are paid according to local market norms. So, if you decided to move from London city to a more rural area, for example, you might not continue to get paid that London salary even though you’ve stayed in the same job.
“We’ve already seen large organisations like Facebook announce that, although employees can work from home for the next five to 10 years, their salaries are likely to be adjusted in line with the cost of living in an individual’s chosen location,” he says.
“If you can move to a lower price location to do your work, your work can also move to a lower price location, without you. This path will be smoothed by the evolution of ‘schedule of rates skills registers’, where high-level job definitions will be swapped for much more closely defined skills.”
It’s great that more companies are offering the flexibility to work from different places, but employers and employees alike need to pay attention to the negotiation that comes with that, Charman explains.
How we might reward employees of the future
So how can we get the metered working model right? According to Charman, we need to remember what exactly we’re trying to achieve with it: “The intention behind skills-based compensation is to create a more dynamic reward structure.
“The ideas are intended to retain talent with critical skills, rather than simply trying to get away with paying as little for labour as possible.”
Paying ‘skills allowances’ can help. Charman says these would be more closely aligned to variable market rates, encouraging employees to invest in “hot skills” and avoid the trap of allowing their skills to degrade in market value.
“But current HR tech is based on the assumption there are defined jobs, grades and reward levels,” he says. “Moving to a far more complex, flexible, skills-based and highly variable reward framework poses a choice; either go back to the chaos of spreadsheets or invest in a digital total reward system to audit and analyse this new method of remuneration.”