How To Reward Top Talent

According to research top talent in many UK companies are not happy and voting with their feet. This is despite the fact that many of them are highly paid on average £325,000 per annum and receiving a bonus of £100,000 on average. This just goes to show that money does not always motivate.

So what are the reasons why top talent are creating high turnover costs to organisations. According to research, top performers are unhappy with company pay structures, lack job satisfaction and training and development opportunities, They are also fed up with constant relocations which create job insecurity.

So as companies fail to meet the expectations of these top performers, often they fail to make the grade. Many companies feel that paying high salaries ensures high productivity and profits for them, but that is not always the case. Companies end up paying out huge salaries yet strategic business objectives and performance targets are not met, therefore, misaligning reward strategy to business strategy.

As an example, the financial benefits package of an executive is usually made up of salary, benefits, performance bonus, share options and car/car allowance as well as the standard pension, private health insurance and healthcare.

However, companies need to consult with the individuals concerned to ensure that the package is tailored appropriately meeting the needs of both the individual and the organisation. Job satisfaction and development needs need to also be incorporated so that the total reward package is strategically effective.

As with all reward solutions the total reward package for top talent needs to be fair, equitable, transparent and competitive. To get ahead of the game, companies need to be highly creative to determine reward solutions that will recruit and retain in the face of stiff competition.

Using the benefit package to incorporate different benefit solutions can make the world of difference such as paid sabbaticals with holiday vouchers or the opportunity to drive a high performance car on the open road for meeting company targets can be a huge motivator for certain individuals fostering high performance.

Other options could include flexible hours, extra days off, better parking and workspaces, publicly recognising top talent in announcements and share options.

The company’s talent gains the recognition and respect for a job well done and for the huge responsibility they carry to ensure the company performs well.

The company benefits by fostering high performance, gaining competitive advantage and addresses the huge skills shortage that exists in the

Offering stretching training and development opportunities can enhance job satisfaction. These usually highly educated top performers want to continue growing their skills through a range of options such as further academic qualifications, secondments and action learning opportunities. Likewise the company benefits from having top employees who are in the know with new ideas which help to stay ahead of competitors and avoid products and services becoming stale. Succession planning is ideal to pick out the talent pool for development.

When looking at relocating, companies should consult with their top talent to see if this is really necessary to move their top performers or could their roles be carried out in a different way eg incorporating flexible working opportunities including home-based working. This can benefit the company as well by not paying out huge relocation or redundancy costs to all concerned.

Now Everyone Can Have Flexible Working! But Will They?

Nick Clegg has just announced a big shake up with flexible working in the UK which is designed to help the economy get moving. New mothers will be able to share leave with their partners and all workers will have the right to flexible hours. Mothers could return to work two weeks after childbirth and hand over their leave to the father. Parents will be able to split time between them or take time off together, as long as no more than 12 months is taken in total and no more than nine at guaranteed pay. Fathers-to-be will also be given a legal right to take unpaid leave to attend two antenatal appointments.

Every employee in the country will also be given the right to ask for flexible hours to encourage different work patterns for parents and help more women back into work. Grandparents will be able to apply so they could look after their grandchildren. It is estimated that around a million women are effectively locked out of employment because of problems balancing work and childcare.

Flexible leave will be reviewed by 2018 and extending paternity leave will be re-examined then.

According to Clegg more and more men are taking on childcare duties, or want to, and flexible leave builds on that.

The entitlement to ask for flexible hours will be introduced in 2014 at the earliest and employers will have to provide good reason for refusing a request. Currently flexible working can be refused to business reasons.

However will this proposed radical reform of flexible working, work in practice? Women continue to be the primary carer of their children and many are reluctant to give up arrangements that allow them to spend precious time with them. Research in the past has shown that although men do enjoy spending time with their children, the majority find work a welcome refuge from family life. Furthermore in the UK unemployed fathers actually spend very little of their time with their children despite being able to do so.

The changes in the law are designed to give mother a real choice in the work/life balance. However flexible working is not always practical for companies. Increased flexible working could cause major disruption which a small company may not be able to afford.

Warning: Use Interns With Care

The recent case of Tony Blair’s office being in hot water over unpaid internships has placed focus again on the growing use of internships in the UK.

An internship provides the opportunity for a graduate to gain hands on work experience within an organisation which will then help them have an edge in the jobs market. It can last between 3-12 months. Other benefits include a chance to improve communication and customer service skills. They have a chance to apply classroom knowledge and to grow in confidence. They also make valuable connections and are able to strengthen their CVs. An internship provides a useful transition from studying to employment providing a gentle buffer between the two so graduates develop a good work ethic. There may be a possible job offer with the employer they have been working with provided they like the work.

Organisations benefit from internships in various ways. In “test driving” possible talent they may find future employees. They can take advantage of low cost labour and if things don’t work out there is no high severance package. It is usually quite easy to find an intern with low cost or no cost marketing. Employers can often approach colleges and universities who will advertise an internship for free to the wealth of untapped talent.

There is no actual legal framework for the use of internships. Depending on their status they may have no apparent employment rights which may leave their use open to abuse. Students required to do an internship for less than a year as part of their studies are not entitled to the National Minimum Wage neither is an intern who shadows another employee and undertakes no work. Furthermore if the intern is working as a volunteer they are not entitled to be paid.

Interns who fall outside of this criteria should be paid the National Minimum Wage at a minimum and have the right to paid holidays. They also have protection from excessive working hours and discrimination. If an intern undertakes regular paid work they may qualify as an employee and will benefit from a much wider range of employment rights.

Unfair Dismissal And Human Rights – Legal Insanity?

In an important test case, the Court of Appeal has been asked to decide whether the test of ‘proportionality’ laid down by the European Convention on Human Rights (ECHR) should be applied to unfair dismissal cases (Turner v East Midlands Trains Limited).

A senior train conductor who was dismissed after being accused of fraud is arguing that the Employment Tribunal that rejected her case should have considered the personal consequences of her losing her job and found that the circumstances amounted to a violation of Article Eight of the ECHR, which enshrines the right to respect for private and family life.

Her lawyers argue that her dismissal, at the age of 51, had irreparably stigmatised her previously spotless reputation, ruined her prospects of getting another job and destroyed her relationship with long-standing colleagues, some of whom had ‘ostracised’ her.

It was submitted that the consequences of dismissal were so serious that Article Eight was ‘engaged’ in the case and that the ET should have considered whether the woman’s dismissal amounted to a disproportionate interference with her human rights.

After 12 unblemished years working for East Midlands Trains Limited, the woman – who has always vehemently denied any wrong-doing – was accused of deliberately manipulating a hand-held machine to print out ‘non-issued’ tickets, which closely resemble genuine tickets, and selling them to members of the public for cash.

She was dismissed in March 2010 and has since had her unfair dismissal claims rejected by an employment tribunal and the Employment Appeal Tribunal. However, she is now asking the Court of Appeal to overturn those decisions and order a re-hearing of her case by a fresh tribunal.

However, lawyers representing East Midlands Trains insist that the company carried out a ‘thorough and fair investigation’ before dismissing the woman. ‘It would be an extraordinary state of affairs if dismissal in such circumstances by a private sector employer was, or was capable of being, unfair simply because the appellant’s reputation or ability to interact with her former workmates had thereby been affected,’ it was submitted.

Is this the law gone mad? If a thorough investigation has been conducted and an employment tribunal and EAT has concluded that unfair dismissal has not occurred then that should be the end of it.

What you need to know about contractor agreements and tax

The BBC have recently announced their intention to review the type of contract they provide to their staff following a tax review. Issuing the correct type of contract is important to avoid the heartache of tax implications for both employer and employee for getting it wrong.

The BBC currently have lots of staff who are working as “personal service companies”. The term personal services company was devised by HMRC following the introduction of IR35 by Gordon Brown in 2000.

There is no clear definition in law of what actually constitutes a personal service company, HMRC often use this lack of clarity to their advantage when investigating the tax affairs of contractors. In the contracting sector, the generally accepted definition of a personal service company is a limited company that typically has a sole director, the contractor, who owns most or all of the shares.

The contractor’s personal service company generally supplies professional services to end user clients, either directly or via an agency. The professional services, typically IT or engineering, are delivered by the contractor and, just to reinforce the point, they are also the owner and director of the business.

A limited company is a tax efficient way for contractors to work as income is split between salary and dividends. Employers and employees class 1 national insurance is not paid on a large part of their income therefore they pay less tax. No wonder this situation is often under the scrutiny of the taxman.

The use of these contracts allows a company to avoid the hassle and expense of hiring an employee showing they do not wish to have an employer-employee relationship with contractors. Some companies use agencies to act as a further buffer between them and the contractor.

However the introduction of IR35, which is designed to generate additional tax revenue, has placed the contracting industry at risk of being investigated and liable for higher tax bills.

Companies can protect themselves from the ravages of IR35 by having clear written agreements in place with their contractors. The agreements should incorporate a clause stating the contractor is solely responsible for managing tax and NI and they should be required to invoice the company. The contractors should have the freedom to choose to where to work and provide an agreed substitute and they should use their own equipment rather than that belonging to the company. Furthermore they should have the freedom to work for other companies at the same time.

The nature of the contract should be reflected in actual working practice. A company that issues such an agreement then treats a contractor like an employee with the ensuing control of the employment relationship is taking a risk of being investigated by HMRC with huge cost implications for both parties. For the protection an employment contract (contract of services) should be provided, which is what the BBC intends to do with many of its staff working for personal service companies.

The Secrets of Successful Succession Planning

Succession planning is a process for identifying and developing employees who have the potential to fill key business leadership positions within an organisation. Effective succession comes from creating a talent pool from which individuals can be plucked to fill senior management roles having been given access to career development opportunities to build skills and experience. It can provide fast track opportunities or those at a slower pace depending on organisational needs. Talent pool management tends to be more strategic than one step or job layer succession whereby individuals just below senior management level are groomed as key replacements for identified roles. The individuals are considered to be almost ready for promotion and this type of succession process doesn’t take too much planning.

Succession planning can only be successful when there is key commitment from the CEO and strong engagement from the senior management team.

There are three stages to succession planning.

1. Evaluate all employees and their current needs. List all employees on the team and their positions then list the current number of open positions/positions to be filled in the future and the required skills.

2. Review the employees who can be promoted and into what position. This might be in a few months time or a few years.

3. Develop an action plan for those employees who are to be promoted. Make a list of skills and experience they need to gain and develop a training plan.

A succession plan is an effective way to formulate a recruitment and development strategy. It should be reviewed several times a year to ensure it is on track.

Succession planning gives a win win solution to both the organisation and employees alike. The organisation benefits because there is always a drip feed of talent to come on board and head it up. Employees benefit because succession planning provides career development and job satisfaction opportunities.

Is An Unsigned Employment Contract Worth the Paper It is Written On?

It is always good practice to ensure that a contract of employment is signed following a change in role or promotion so that there is no doubt that the employee has understood and agreed to the terms associated with the employment.

However, the recent case of FW Farnsworth Ltd v Lacy considers whether an employee can be bound by a restrictive covenant even if their most recent contract of employment was never signed.

Lacy failed to sign a new employment contract containing restrictive covenants issued to him on promotion but was still bound by the covenants. He could not therefore join a competitor of his employer following his resignation. Lacy had been promoted and received this new contract. In his previous role there had been no restrictive covenant in the contract that he had signed. The new contract also entitled him to apply to for family private medical cover, which had not been available to him previously.

Lacy did not sign the contract. He did not raise any objections to the contract and in April 2010 he applied for and received family private medical cover. He subsequently resigned in order to work for a competitor and argued that he was not bound by the restrictive covenants as he had not signed the contract. His employer argued that his acceptance of the new contract could be inferred from the fact that he had applied for family medical cover.

The High Court agreed with the employer that Lacy had impliedly accepted the new contract and he was therefore bound by the restrictive covenants. In order for acceptance to be implied, it was necessary to point to conduct by Lacy which was solely referable to his acceptance of the new terms. His application for family private medical cover, without any protest or reservation, which was only available to him under the new contract was such an act.

In order for employers to ensure that they will be able to enforce a restrictive covenant included in a contract of employment, they should consider the following points:

• Make sure that employees sign and return their contracts of employment to remove any doubt that the employee has understood and agreed to the terms.

• The covenant included in the contract must be reasonable. A geographical area that is too wide or a period of time that is too long could make the covenant void. It is important to consider what the organisation is trying to protect, and whether the covenant imposed gives that protection or does more than is reasonable.

• Ensure that the covenant is appropriate for the job that the employee is doing. It is rarely appropriate for an organisation to have one restrictive covenant that is applicable to all jobs within an organisation.

• If an employee is promoted, it is important to consider what restrictive covenant, if any, is appropriate.

Rain Soaked Britain – Is Your Business Surviving?

Source: Evgeni Dinev/Free Digital Images

The climate is changing the weather has started to have a huge impact. Extremes of weather seems to be the norm. This winter has been the wettest on record for one hundred years and there seems to be no end to it.

It makes sense therefore that if a business wishes to survive it needs to be prepared and plan ahead for possible eventualities so that the business can return to “business as usual” as quickly as possible after a major disaster. It is estimated that half of businesses have no effective plan in place, yet no business is free of risk of storms, fire, floods or a terrorist bomb.

Business continuity planning or disaster recovery should have five basic steps – analyse the business, assess the risks, plan and prepare, communicate the plan, test the plan. There should be written procedures that will allow a business to get back on its feet quickly. Having a checklist in place provides a structure for planning. Plans should detail immediate to long term responses.

An immediate response should give guidance on ensuring staff are safe eg evacuating the building, taking shelter, shutting down equipment, using fire extinguishers, administering basic first aid, calling 999.

Once staff are initially safe the short term response should include details on protecting the business eg contacting the insurance company, securing the building and valuable equipment and informing customers. As time goes by staff need to be kept informed of developments for business re-opening.

It may take some time for a business to get back to normal after a major disaster. Businesses may need to consider long term support requirements eg providing traumatised staff with psychological support.

After an emergency the business continuity plan needs to be reviewed for successes and failures making amendments and improvements as appropriate. Whilst disasters cannot be avoided, with careful planning the impact can be minimised.

My Train Has Been Cancelled Again! What the Train Companies Can Learn from Workforce Planning

A recent announcement by London Midland trains related to a substantial cancellation of train services on the Northampton to Birmingham line. This is due to a lack of qualified drivers caused by several factors. It takes on average twelve months to train a driver but driver retention is poor due to crippling shifts. Despite the attractive salary, high train driver attrition demonstrates that money is not always a motivator.

The planned need to look at staff rotas may help the problem in the short term, however, a longer term solution needs to be found in order to ensure the problem does not occur in the future.

The strategic initiative of workforce planning would allow the train company to plan well into the future, five years ahead at least. Future demand and supply of staff is key. Planning will help to identify any shortfalls so that staffing gaps can be plugged, therefore, workforce planning provides the right people at the right time with the right skills. Workforce planning can include the implementation of succession planning, flexible working, skills audits, talent management, multi-skilling and role design to name a few processes. Ideally it should run alongside development of the long term business plan, which most forward-thinking companies undertake.

Within the plan, data needs to be organised for recruitment (numbers and levels), training, learning and development, organisation structure and deployment.

Organisational strategy can be an internal driver. However external drivers can be customer and stakeholder expectations and changes in market forces to name but two. In the long term the government has plans to develop the rail service to meet increasing customer demands, so train companies need to rise to the challenge with their workforce planning.

The implementation of workforce planning need consensus from all key stakeholders with key responsibilities outlined. Managers need to be actively supported as they contribute to the process. Regular reviews and amendments are required. The process should be a continuous cycle to ensure future people needs are met.

London Midland Train Cancellations
Further Train Cancellations

Why Bother About Equal Pay?

The recent high profile case where 170 women have been given the right to take an equal pay case against Birmingham City Council brings equal pay firmly in the spotlight. The workers, mainly women who worked in traditionally-female roles, such as cooks, cleaners and care staff won the right to seek compensation in the civil courts for missed bonuses. The women were among workers who had been denied bonuses which had been given to staff in traditionally male-dominated jobs such as refuse collectors, street cleaners, road workers and grave diggers. For example, the annual salary of a female manual grade 2 worker was £11,127, while the equivalent male salary was £30,599. The men received a bonus of up to £15,000 per year.

Usually such claims have to be made within six months leaving a job in an employment tribunal, but the Supreme court has over ruled that principle in this case. These employees now have six years to raise a claim with the potential for a £2 million payout. They are likely to win and cost Birmingham City Council many millions of pounds. This “landmark” judgement could have huge implications for potentially thousands of other workers including in the private sector.

This case is remarkable given the existence of over 40 years of equal pay legislation. In 1970 the Equal Pay Act was brought in following a fight by women sewing machinists employed by Ford to stitch the car seating who were paid much less than their male equivalents who assembled the cars. Whilst the men and women did different jobs, the value of their jobs was deemed to have the same demands in terms of effort, skill and decision-making ie work of equal value. This and equal work underpins equal pay legislation. Equal work can be the same or broadly similar (known as like work) or different but equivalent (known as work rated as equivalent). However men on average are paid more than 10% more than women.

Organisations that want to pre-empt claims being laid at their door need to start thinking how to head off such claims. One way would be to undertake an equal pay audit. The EHRC provides a toolkit which is a guide for employers carrying out an equal pay audit. It is designed for businesses with over 50 employees. It helps carry out an equal pay audit related to gender, race, disability or working patterns. Equal pay audits are recommended in the Code of Practice on Equal Pay.

Another alternative would be to undertake a job evaluation process across an organisation to identify areas of weakness to review and correct. Job evaluation is the systematic evaluation of the worth of jobs in relation to other jobs in an organisation. An analytical job evaluation scheme provides a good defence in an equal pay claim whereas a non-analytical scheme such as job ranking or job comparison would not provide the same defence as it is based on subjective opinion. Therefore a factor comparison scheme such as NJC job evaluation or Hay would provide robust defence.

Birmingham City Council lose equal pay appeal bid