Pay Matters

Labour Day cannot be celebrated without reflecting on pay practices. In fact many of the Union leaders, individual employees, and employers did voice their feelings about pay and minimum wage last May Day.

Pay constitutes the single most important consideration of employment. The other components of the reward system are the provision for learning and growth, career advancement , conducive workplace, leaves, pension, perks and other benefits. Everyone advocates that the pay packages should be just, fair and equitable.

We are all aware of the different bodies responsible for pay determination in Mauritius. While the Pay Research Bureau sets salaries in the Public Sector, there are different institutions in place to set salaries in the private sector. The National Remuneration Board awards salaries by industry. Salary consultants are hired to set salaries generally not covered by the NRB and PRB.

A right pay package is instrumental to maintaining harmonious industrial relations, drawing on employees’ engagement and making organisations great. The design of a pay system in an economy / sector needs to be grounded on firm irrefutable principles. These principles create a road map towards making pay an effective tool of the business process.

The first and foremost principle is that of transparency and fairness. Every stakeholder should be aware of and understand the pay/reward determining process. The days of designing rewards in a black box and trying to sell to management and the workforce on the back end are long over. Everyone needs to know the mechanism and the money (share of cake) allotted to the pay bill.

This brings us to the second principle which is the fiscal sustainability of the overall wage bill, including the cost of benefits and other perks.

The third principle would be to align the reward system with business goals. The organisations should get value for the pay offered. Pay should connect the workforce to key measures of business success.

The fourth principle is to reward ongoing value of the worker with base pay. It is a combination of three dimensions: the skills and competencies that the organisations need to deliver, the individual’s consistent performance over time and the individual’s value relative to the market.

Variable pay is a sound principle. Because people make results happen, organisations should reward those achieving the results. However, people have to re-earn this variable pay every performance period. Having spent many years in senior management position in the public sector I can safely say that people in general want to make a positive difference. They want to count and to perform effectively. They want to know what the organisation expects of them and how they fit into the overall plan for the organisation’s success in terms of quality, cost- effectiveness, customer satisfaction, and delivery of products.

 

The above principles can reasonably and practically help creating/changing/reviewing a pay structure.

 

* Published in print edition on 8 May  2015

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