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23rd Annual Financial Sector Compensation and Benefits

Develop a compensation and benefits policy that succeeds in being fair, sustainable and competitive throughout the pandemic by leveraging HR data and appropriately responding to the latest regulation

November 16-17, 2021
Online Conference

An Interview with Charles Cotton, Senior Performance and Reward Adviser, at CIPD

Ahead of the 23rd Annual Financial Sector Compensation and Benefits Conference, we spoke with Charles Cotton, Senior Performance and Reward Adviser, at CIPD. Charles Cotton directs CIPD's reward research agenda and recently produced a survey on UK reward management. He is also responsible for the CIPD’s public policy work in the area of reward and has given evidence to select committees on banking pay executive remuneration and politicians’ expenses as well responding to various consultations, such as on pensions, retirement and corporate governance.  

During this time, RemCo in financial firms have had to make some hard decisions, how has the pandemic impacted decisions around compensation and benefits?

RemCos have faced a difficult balancing act during this time. They have had to balance various competing demands when making reward decisions under the scrutiny of external stakeholders, such as politicians, regulators and investors. For instance, even if the performance of both the business and employees warranted a large bonus, giving one wasn’t an option given the prevailing social attitudes. 

RemCos have also become more aware of the importance of the role of key and essential workers in their organisations, some of those who might have attracted less attention in the past because they were lower down the pay scale. In response, RemCos are now more concerned that these workers receive the due recognition for their efforts during this time.

How has this decision-making affected retention or other interesting metrics throughout the pandemic?

The pandemic has increased external pressure for employers to look at the role ‘ESG’ metrics play when making pay decisions. HR and reward teams have an important role linking what employers says about ‘ESG’ on the one hand to what pay encourages people to do on the other hand. 

For instance, there has been increased interest in embedding ‘ESG’ metrics in executive bonus and incentive plans. Similarly, people metrics have been used to support the financial, mental, and physical wellbeing of all employees, especially those on the front line. 

The acceleration of the Black Lives Movement has focused internal and external attention on the employment experience of minority ethnic workers. As a consequence, HR and compensation teams have been using people metrics to review the impact of how they manage, develop and reward these workers and adjusting their polices as necessary.

What must financial firms do to ensure that actions taken around compensation and benefits appear fair at all times especially during a stressed event?

Firms need to have a definition of what they mean by fair, which they can then share with employees to explain their reward decisions. Compensation and HR professionals have a key role in helping their organisations create this definition, communicating it with employees and ensuring that senior management use this definition when making reward decisions. The creation of the definition will involve consultation with key stakeholders, such as employees, investors, customers, etc. 

As well as treating their employees fairly, the focus is being widened to whether those people working for firms that make up the supply chain are also being compensated equitably. This includes not only reviewing how much is on offer in terms of liveable wage, security of hours, benefits etc, but also the fairness of reward outcomes, such as the size of gender pay gaps.

Financial firms are looking to become more sophisticated with their performance management system, how far has the financial market come with applying people analytics?

To be able to talk about fairness in a meaningful way, firms need to ensure that their pay and benefit practices are equitable. This means that they need to be able to collect the appropriate people data in the right format and at the right time to analyse the fairness of reward processes and outcomes. Again, HR and reward teams have an important role in encouraging firms to invest in the systems that will allow them to collect the information they need and analyse the results.

Such systems will also help inform the design of their performance management systems as well as allowing senior management to assess how successfully the performance management system has been designed and implemented across the organisation.

Compensation and HR teams also have an important role in encouraging their employees to disclose personal information so that they can use this data to check that the firm’s reward and recognition practices are fair. They also need to ensure that this sensitive data meets GDPR requirements and is stored on a cyber secure system.

What, for you, are the benefits of attending a conference like this financial sector compensation and benefits meeting and what can attendees expect to learn from your session?

The benefits are finding out what other employers are doing in this sector. The financial service industry covers a wide range of employers, from large retail banks to hedge funds. Some of the challenges and opportunities faced by these firms are similar while others are very different. It’s useful to find out about the variety of responses that have been used, as well as learning from what organisations located in other parts of the sector or in other countries are doing. You can then use these insights in your own organisation. In addition, you get to hear the findings from the latest research and the implication for future practice.

Tête-è-Tête: How do you deal with disgruntled employees that have had a pay freeze or cut during COVID-19? 

• How do you best communicate the situation?
• How best to retain talent in spite of these decisions surrounding pay

For registration pricing and multiple attendee discounts, please contact:

Ria Kiayia 
riak@marcusevanscy.com

Charles will be presenting during Day Two!

Use HR data and people analytics to ensure decision making around pay is fair and sustainable  

Roundtable discussion: What performance management system is used to inform pay progression: How far has the financial market come with applying people analytics? What quantitative ESG KPIs are being used to make compensation decisions?