Download pay and employee relations forum

PAY AND EMPLOYEE RELATIONS FORUM
MINUTES OF MEETING – 5 MARCH 2008
Present
Jacqui O’Brien
Dave Williams
Gerri Green
Zoe Hoskin
Libby Grant
Ingrid Froyland
Meryl Wade
Steve Davies
Elaine Harris
Reg Davies
Peter Thomas
Paul Warren
Simon Pannell
Debbie Williams
Gerry Trill
David Bush
Andrew Chinneck
Tony Rumph
Barking & Dagenham
Bexley
Brent
Camden
City Of London
Enfield
Hackney
Haringey (Chair)
Hammersmith & Fulham
Hammersmith & Fulham
London Councils
London Councils
London Councils
London Councils
Redbridge
Richmond
Sutton
Wandsworth
Apologies for Absence
John Kitching (Barnet), Charlie Shadrake (Ealing), Peter Mantle (Hillingdon), Lee Evans
(Kensington & Chelsea), Steve Key (Merton), Paul Napthine (Sutton), Kerrie CuretonWilliams (Tower Hamlets)
Approval of Minutes
Approved.
Matters Arising
Peter Thomas reported to the group that Colin Miller from Kent County Council has agreed
to run a workshop on contribution pay in mid-May; seven boroughs have contributed £250
towards this project and London Councils £500. There will be places for eight boroughs on
this workshop so there is one place left. Please contact Peter (020 7934 9962) if you are
interested. Any funds that remain after the workshop will be used for some additional
activities related to contribution pay which the seven boroughs can agree.
Pay & Grading, Contribution Pay and Reward Management – City of London
Libby Grant, Head of Strategic Services at the City of London gave a presentation on the
projects they have been undertaking on pay & grading and reward management which
focused on:

Scope of the projects

Organisational need for change

Finance
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
Job evaluation

New grade structure

Assessing contribution/contribution pay

Pay progression

Performance development framework

Performance appraisal process

Performance management
The full presentation slides can be accessed below:
http://www.londoncouncils.gov.uk/extranet/doc.asp?doc=22022
Single Status and Pay Negotiations
Simon Pannell (London Councils) discussed the following issues:
Single Status

It has been confirmed that there would be a further bidding cycle for the capitalisation
of equal pay compensation. Bids will need to be submitted by the end of May with
directions to be issued by the end of September.
Pay Negotiations

London Councils had hosted the Local Government Employers’ regional pay briefing in
January where the unions’ claim for 6% or 50 pence per hour, whichever is the
greater, was discussed. The Treasury position is that pay settlements should be
consistent with the CPI/inflation target of 2%. However, it appeared that there could be
some flexibility around this 2% figure if a long term deal is agreed.

In mid February the unions covering the Scottish local government rejected an
employers offer of 2.2% (2008), 2.3% (2009) and 2.2% (2010).

Schools Support Staff NJC – the Government is committed to establishing a NJC for
school support staff; it is planned that this body becomes operational from September
2008. All schools will be covered apart from academies. There had been strong
opposition to the proposals from boroughs at the LGE pay briefing.
For more information on Single Status and the pay negotiations please contact Simon
Pannell
HR Research Report
The research report was circulated prior to the meeting. Link to report:
http://www.londoncouncils.gov.uk/extranet/doc.asp?doc=15369
Paul Warren and Peter Thomas highlighted the following issues from the report:
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
Occupational pay and Benefits Survey. Twenty-two boroughs have currently
responded to the survey; the data is currently being quality checked and the results will
be released, to participating boroughs only, at the end of March.

Chief Officers Pay and Benefits Survey. A 100% response has been achieved for
this survey and all boroughs were thanked for their efforts; the full results will be
released at the end of March.
Job Vacancy Pay Monitor. The eight job vacancy pay monitor covering the period
September 2007 to February 2008 will be released by the 27 March 2008. The
previous monitor is available via:
http://www.londoncouncils.gov.uk/doc.asp?doc=15347&cat=1977
Workforce Intelligence Group Update
Paul Warren mentioned that the next meeting of the group is 9 April 2008 and it has an
agency staff focus with presentations from Stephanie Favell (Havering) on the agency
staff Electronic Knowledge Exchange, and Georgina Aplin from the Office of Government
Commerce on the future project work they are doing on decreasing agency usage and
workforce planning.
During 2007 a small working party of boroughs identified sixteen key human capital performance
indicators, and agreed definitions were determined. These metrics are to be populated with data
by boroughs on a quarterly basis (December, March, June, September, and December). The
first collection was December 2007 and fourteen boroughs participated.
London Councils together with five boroughs are currently exploring the feasibility of establishing
a regional workforce/human capital data mart for London. A data mart is a specialised version of
a data warehouse focusing on a specific data area. With this concept boroughs would upload
their workforce data quarterly into the database and this would allow them to, using a reporting
tool, drill down into their own data while having comparable top level benchmarking data from
the other boroughs.
Total Reward Sub Group
Peter Thomas informed the meeting that the group is still ‘virtual’. An online resource has
been created which holds a number of examples of total reward statements. Link:
http://www.londoncouncils.gov.uk/extranet/doc.asp?doc=20587
Contribution Pay Sub Group (CPSG)
Andrew Chinneck gave an update on the CPSG; following the meeting of the group on 9
January 2008 the scope of the project has been agreed, and individual strands of the
project have been identified and deadlines established.
The next meeting of the group is on 16 April and will review progress of completing the
specific strands of this project.
Link: http://www.londoncouncils.gov.uk/cat.asp?cat=2576
For more information please contact Andrew Chinneck.
Contribution Pay Sub Group (CPSG) – Pay & Reward Audit Survey
Paul Warren informed the group that as part of the CPSG pay and reward audit survey
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was undertaken to ascertain where boroughs are now in their pay and grading structure
and the major issues and opportunities associated with moving towards a pay structure
based on performance/contribution. The results were distributed to the group (see
Appendix One)
Any Other Business
The following questions were raised under AOB.

Developing the group – Peter Thomas asked for volunteers to make presentations at
meetings.

Customer Satisfaction Survey – Peter Thomas thanked the group for responding to
this survey and the results were very encouraging. Some good ideas for developing
the group were identified such as hosting an annual conference focusing on strategic
reward management issues (see Appendix Two for full results).

CIPD Reward Management Survey 2008 - Peter Thomas distributed summaries of this
survey which provides information in respect of current and emerging practice in UK
reward management (see Appendix Three). The full report can be accessed via:
http://www.cipd.co.uk/subjects/pay/_rewrdmansurv.htm?IsSrchRes=1

Greater London Authority, Women in London’s Economy Report – Paul Warren
informed the group of this report which analyses the role of women in London’s
economy. It can be accessed via
http://www.london.gov.uk/mayor/economic_unit/wile/index.jsp
Date of Next Meeting
The next meeting of the Forum will be on Wednesday 4 June 2008 at London Councils
offices, starting at 10.00 a.m.
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Appendix One - Pay and Reward Audit Survey 2007/2008 – Results January 2008
This survey was conducted as part of the contribution pay working group to ascertain
where London boroughs are now in their pay and grading structure and to identify the
major opportunities and issues associated with moving towards contribution based pay.
Eighteen boroughs responded to the survey equating to a response rate of 55%.
Section 1 - Performance Appraisal

All responding boroughs have a standard performance appraisal scheme in place.

Almost forty percent of respondents identified that between 76% - 90% of employees
regularly receive a performance appraisal (see table one).

Thirteen boroughs (76.5%) monitor their appraisals in terms of numbers completed
and four boroughs (23.5%) do not; in terms of quality nine boroughs (53%) monitor
their performance appraisals and eight (47%) do not.
Table One – The percentage of employees who have regularly received a
performance appraisal
%age of Employees
receiving an appraisal
100%
91% - 99%
76% - 90%
51% - 75%
50% and below

Number of boroughs
%age of boroughs
2
1
7
6
2
11%
6%
39%
33%
11%
Just over half (56% - 10 boroughs) have an appraisal scheme that allows for an
individuals performance to be graded or ranked in some form; eight boroughs (44%)
do not. The reasons stated for not allowing individuals to be graded includes no
organisation wide competency scheme and a range of jobs makes it hard to have
consistency in measurement of outputs.
Examples of how individuals are ranked/graded:
-Excellent, good, fair, unsatisfactory.
-Outstanding, effective, partially effective, need to improve.
-Highly effective, effective, did not meet requirements, (may add another
category between effective and did not meet requirements – partially met
requirements).
-Ranked against achievement of set targets.
-Assessed against competencies in terms of working towards the objectives listed
under each competency.

The vast majority of boroughs (83%, 15 boroughs) feel that their appraisal scheme is
seen as an effective means of improving performance of the individual; One borough
said their scheme was very effective, one not effective and one didn’t know. One
borough did state their appraisal scheme is only effective if fully supported with regular
one to one meetings and team meetings. It is less effective if treated as a stand alone
event.
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
Just over 83% (15 boroughs) have a mechanism in place that ensures individual
objectives relate to organisational objectives; two boroughs (11%) do not and one
borough didn’t know.
The type of mechanisms used are:
-Objective setting as part of the performance cycle.
-Pro forma’s actually ask what links to corporate plans, strategies.
-Appraisals linked to competencies which are linked to the corporate plan.
-All individual objectives are cascaded down from the corporate plan.
-Appraisal target setting discussion tested by the employee survey.
-Annual audit of performance management; HR looks at a sample of work plans.
-Individual objectives refer back to the relevant parts of the service plan.
-E-forms on appraisals required to be linked with standard list or other reason
given as to why objective being set.
-Individual targets are set that match departmental/organisational objectives
coupled with personal development aspects.
-The appraisal has individual (development) objectives linked to the unit’s service
plan objectives.
Section 2 – Current Pay and Grading Structure

The vast majority of responding boroughs have a pay structure based on narrow
bands (12 boroughs – 71%); 3 boroughs (18%) have broad bands and one borough
has spot salaries and one borough has a mixture of narrow and broad bands.

Of those boroughs that are thinking about changing their pay and grading structure in
the near future the following options are being considered:
-Moving from narrow bands to broad bands with open ranges for higher grades
(e.g. SO1 and above), and narrow bands with incremental points for lower
grades.
-Moving from a mixture of narrow and broad bands to a narrow band structure.
-Removing long ranges within some of their existing broad bands.
-Moving from automatic incremental progression to a reward structure based on
performance.

Table two identifies how employees progress through the pay scales, with the vast
majority using time served annual incremental progression.

One borough has time served up to PO7 only; another has performance related
progression for SO1 and above and time served for below SO1; one borough has
linked grades which individuals move through as they develop and/or gain
qualifications.
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Table Two – How employees progress through the pay scales
Progression mechanism
Time served annual incremental
progression
Time served and performance related
progression
Performance related progression and
competency based progression
Performance related progression
Time served and competency based
progression
Time served and contribution related
progression
Number of boroughs
%age of boroughs
11
61%
2
11%
2
11%
1
6%
1
6%
1
6%

Eleven boroughs (65%) stated that there is a perception within their borough to
change their pay progression mechanism; four boroughs (24%) stated that there was
no such perception and two (12%) didn’t know.

Those boroughs who indicated a perception for change were asked what mechanisms
should be used for pay progression. The most common answer was contribution
based progression followed by performance related progression.

Six boroughs (37.5%) of responding boroughs have implemented single status; 10
boroughs (62.5%) had not.

The vast majority of boroughs use and plan to continue to use the inner/outer London
pay spine (14 boroughs – 82%); three boroughs (18%) did not know. Two boroughs
stated that they will only use the pay spines for up to SO1.

Boroughs were asked to specify any performance/contribution payments as a
percentage of basic pay and these are listed in table three.
Table Three – Performance/contribution/competency payments as a
percentage of basic pay
Payment
4% on average
2.5% - 5%
Up to 15% in small number of cases
Approximately 5% (senior managers only)

The majority of boroughs think that these payments are just right (6 boroughs – 75%),
compared to two boroughs (25%) who think they are too low.

Ten boroughs provided information on the level of employee covered by performance
payments with six boroughs (86%) identifying senior officers; managers and all
employees were identified by one borough each. Of the remaining two boroughs one
stated that employees over SO1 had access to performance payments and the other
that more junior employees are covered by performance payments following
completion of training or qualifications.

Six boroughs (67%) perceive their performance payments to be effective in supporting
the organisation to achieve its goals; one borough thought there payments were very
effective and two boroughs didn’t know.

Boroughs were asked as to how their performance payments were perceived within
the organisation. Answers varied immensely from being effective, valued and useful to
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being perceived as impossible to get. They were also seen as an expectation rather
than a reward.

Five boroughs identified that they have other types of rewards linked with performance
such as staff awards (employee of the year, team of the year).

There is interest in total reward statements with twelve boroughs (75%) thinking about
implementing them; four boroughs (25%) have no interest.

Seven boroughs (41%) have already implemented a flexible benefits/salary sacrifice
scheme; eight boroughs (47%) are interested in implementing such a scheme and two
boroughs (12%) have no interest.
Section 3 – Implementing a New Reward Structure

The main barriers to implementing a new reward structure are resources within HR
and resistance from trade unions (see table 4)

Aligning reward with employee performance, culture change, and promoting
continuous improvement are seen to be the main positive outcomes when
implementing a new reward structure.
Table Four - Major issues/barriers when implementing change to existing reward
structure
Barrier
Resources within HR
Resistance from trade unions
No allocated budget
Resistance from staff
Resistance from management
Other priorities
Knowledge within HR
Inadequate systems unable to support
the new process
Resistance from within HR
%age of boroughs citing these
as a major barrier
81%
81%
75%
50%
44%
38%
31%
25%
19%
Boroughs could pick more than one issue/barrier
Table Five - Opportunities/positives outcomes of implementing
change to existing reward structure
Opportunities
%age of boroughs citing these
as a major barrier
Aligning reward with employee
performance
Culture change
Promoting continuous improvement
Aligning reward with departmental and
organisational performance
Increasing employee engagement
Promoting personal development
Cost savings
94%
88%
88%
81%
75%
63%
13%
Boroughs could pick more than one issue/barrier
If you have any queries regarding this report/research
[email protected] (020 7934 9913)
please
contact
Page 9
Appendix Two - Pay & Employee Relations Forum Customer Survey Results –
February 2008
A link to an online customer survey was sent to all members of the Pay & Employee
Relations Forum in early February 2008 (61 members). Twenty-eight responses were
received equating to a response rate of 46%.
How often are the network meetings attended?
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Never
Sometimes
Often
Always
How useful are the network meetings?
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Not useful
Occasionally useful
Useful
Very useful
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How useful is the presentation element of the network meetings?
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Not useful
Occasionally useful
Useful
Very useful
Frequency of the network meetings.
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Too few
Right amount
Too many
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Communication between the network meetings (e.g. e-mails, web resource).
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Poor
Average
Good
Excellent
No communication
Respondents were asked to rate, on a scale from 1 to 5 (with 1 being very useful and 5
not useful) those products and surveys relevant to the network. The chief officers pay &
benefits survey and the sickness absence survey were considered to be most useful. See
table below, and refer to table two for the full ratings.
Table 1 – Average
Ratings of Forum Products/Surveys
Product/Survey
Chief officers pay & benefits survey
Sickness absence survey
HR policies & procedures online database
Occupational pay & benefits survey
Employee turnover survey
HR research & people intelligence online resource
Recruitment & retention survey
Job vacancy pay monitor
Average Rating (rating scale 1 to
5 – with 1 very useful through to
5 not useful)
1.48
1.52
1.59
1.61
1.69
1.74
1.78
1.95
Additional comments:

The Forum is an excellent networking opportunity.

The meetings are very informative and appreciate the opportunity to share information
with colleagues from other boroughs. It is a very useful network.

To carry on with the presentations/talks on subjects of current interest so we can learn
from each other.

Think the network meetings are good. Perhaps should identify themes for the
forthcoming year to consider.
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
It would be useful to get more pay information such as on manual jobs for market
comparison purposes although this would no doubt have resource implications.

A regular (once/year) session on the more strategic issues, e.g. where the London
work fits into the national/regional/PPMA picture.

Other than ad hoc surveys, would prefer that sickness and turnover are combined into
one survey.

Consideration should be given to extending the number and scope of the surveys
which are undertaken - for example the R&R survey currently covers only a limited
range of 'hard-to-fill' posts.
Table Two - Individual Ratings of Forum Products/Surveys
Product/survey
Chief
officers
pay & benefits
survey
Sickness
absence survey
HR policies &
procedures
online database
Occupational
pay & benefits
survey
Employee
turnover survey
HR research &
people
intelligence
online resource
Recruitment &
retention survey
Job vacancy pay
monitor
The number of
1 – very
useful
2
3
4
5–
not
useful
Do not
use/ do
not
participate
/ no
knowledge
59%
(16)
22%
(6)
11%
(3)
0% (0)
0% (0)
7% (2)
1.48
27
48%
(13)
52%
(14)
0% (0)
0% (0)
0% (0)
0% (0)
1.52
27
44%
(12)
52%
(14)
4% (1)
0% (0)
0% (0)
0% (0)
1.59
27
50%
(13)
27%
(7)
8% (2)
4% (1)
0% (0)
12% (3)
1.61
26
35% (9)
62%
(16)
4% (1)
0% (0)
0% (0)
0% (0)
1.69
26
27% (7)
58%
(15)
4% (1)
0% (0)
0% (0)
12% (3)
1.74
26
1.78
26
1.95
26
58%
0% (0) 4% (1) 0% (0)
12% (3)
(15)
35%
23%
27% (7)
0% (0) 0% (0)
15% (4)
(9)
(6)
boroughs that responded are in brackets
27% (7)
Rating
average
Response
count
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Appendix Three - CIPD Survey Report 2008 - Reward Management
Summary of key findings
Strategic reward

One-third of respondents report having a reward strategy. A further one-quarter plan to
create one in 2008.

A total rewards approach has been adopted by three in ten of the sample, with a
further one-fifth taking up this approach in 2008.
Base pay

Overall, the most common approaches to managing base pay are to use individual pay
rates/ranges/spot rates and broadbands. For setting salary levels the most important
methods are to use market rates and an ability to pay. For managing pay progression
the most common approach is to use individual performance (either solely or, more
usually, in combination with other factors, such as competency).

Just over half of employers still make a traditional general annual pay rise or cost-ofliving uplift, though this approach is far less prevalent in the private sectors and for
senior employees. The key factors influencing the size of this year’s annual pay review
are organisational performance, inflation and movement in market rates.

Reward specialists will be busy in 2008 amending the way that their organisations
structure pay, attaching salaries to these structures and managing pay progression.
Variable pay

Short-term, cash-based bonus and incentive schemes are widespread in the private
sectors, with most employers operating more than one scheme. The most common
types are individual-based schemes, followed by ones driven by business results, such
as profit.

Around two-fifths of those organisations with bonus or incentive arrangements will be
changing them this year. Typically, most employers review their existing bonus
arrangements every other year.

One-third of all respondents use recognition/ non-cash incentive schemes. They are
more common among private sector employers and large organisations. Such
schemes are usually reviewed every other year.

Just half of private sector employers operate a share scheme or other long-term
incentives for employees. The most common arrangements are executive share option
schemes, company share option schemes and share incentive plans. For the first time
share incentive plans are more popular than save-as-you-earn schemes.
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Pensions and benefits

Ninety-seven per cent of respondents have a pension plan for their employees.

The most common types of arrangement are final salary schemes, group personal
pensions and stakeholders with an employer contribution. However, outside the public
and voluntary sectors, most of the final salary pension schemes are now closed to new
entrants, while a significant proportion are closed to future accrual as well.

Three in ten employers use salary sacrifice arrangements for their occupational
pension, more commonly in the private sector. Around half of those who operate salary
sacrifice pass on their National Insurance Contribution savings to employees, while the
rest keep it for themselves.

One-fifth of employers are planning changes to their pension arrangements in 2008,
with the most popular options being to increase employee contributions, introduce
salary- sacrifice arrangements and increase employer contributions. Of those
increasing their contributions, the majority are doing so for money-purchase
arrangements.

As a percentage of the pay bill, the median cost of providing pensions and other
benefits is 17%, with the inter-quartile range between 10% and 30%. In 2008, just
over two-fifths of respondents expect their benefit spend will stay the same, while just
under two-fifths predict it will rise, similar to predictions for 2007.

Reward professionals will be active this year in amending their organisations’ existing
benefit arrangements. More employers are introducing new benefits or enhancing their
existing benefit provision than are reducing them. The benefits most likely to be
introduced are childcare vouchers, bicycle loans and formal coaching/mentoring roles.
Link: http://www.cipd.co.uk/subjects/pay/_rewrdmansurv.htm