After more than 18 months of unprecedented increases to the cost of living, many employees have had to re-evaluate their financial situations. This can include consideration of their income, leaving both employer and employees alike wondering what the right level of pay is within their organisation and how this compares to the market.
Historically, the charity and social sector offered lower wages compared to the private sector for similar roles. Typically, this was not seen as a major barrier as many people were driven by being able to give back to the community.
Yet, with employees and prospective applicants considering their financial needs, social sector organisations have to balance their own budgets versus the needs of the workforce.
One way of thinking about remuneration is that the pay package is split crudely in to ‘pay’ and ‘benefits’ and offer a “total reward” package that offers more than just a salary. This allows employers to think creatively about high value, low-cost benefits it can offer its employees in addition to salary.
Total reward is typically made up of a range of financial and non-financial elements:
- Direct financial rewards, e.g., pay, variable pay or allowances;
- Employee benefits which have a monetary value to the individual recipient, e.g., health cash plans, salary sacrifice schemes;
- Conditions of service, non-pay and contractual benefits accruing to the individual, including annual leave;
- Pension provisions;
- Learning and development opportunities including the potential to receive funded learning opportunities and training, to grow personally and professionally;
- Working environment, which includes both the individual’s physical working and the climate/culture of the organisation including how they are led and managed and, importantly the flexibility that can be offered.
Setting pay levels
Ultimately, the first thing applicants will look for is the salary that comes with a role and how does this compare to other roles in the market. A crude way of establishing this is through the active job market by comparing roles currently advertised. This does present a rough picture of the current state of wages for similar roles, but is often widely skewed as organisations with different budgets and different locations pay different levels of pay, often for the same role.
A more precise method is to salary benchmark using a database of salary points. At Roots HR we regularly conduct salary benchmark exercises using a large salary database which contains 1000’s of regularly updated salary data points from across the sectors, country and from different sized organisations with different activities.
This allows us to more accurately compare roles with those in the database as we can apply a set of parameters to search for similar roles in similar organisations in similar locations. The result is a set of data we can work from and establish an accurate recommended salary range that will ensure the employer is competitive in the sector.
Building the right package for your employees
Salary alone will not be enough as social sector employers also compete with other sectors who will likely pay more for similar roles. For this reason, employers should think about other offerings they can provide as part of employment.
Here is a list of the top 3 benefits you can offer to enhance your total remuneration package:
- Home or hybrid working: Allowing employees to work from home permanently or hybrid can help with the work/life balance, but also saves on commuting costs and time, thereby benefiting the employee greatly. Homeworking is not for everyone, but data has shown that it can result in higher productivity, making everyone a winner.
- Enhanced Pension: As pension is a percentage of salary, employers can offer enhanced pension payments at a relatively low cost. The requirement for most employees is that 8% must be paid once enrolled, with 5% from the employee and 3% from the employer. Social Sector employers could offer to pay more than 3% and reduce the employee’s contribution, which will result in more money in their pocket, but the pension pot still being contributed to. Employees can have the option to increase their own contribution if they want to.
- Health Cash Back Plan: This is a relatively low cost benefit but can have high rewards for employees. Essentially, the plan will allow employees to claim back money from certain medical bills not ordinarily covered by the NHS such as dentists and opticians. Most schemes also offer discounts on gyms, healthy food and money paid for hospital stays or giving birth. At about £6-8 per employee, per month, you can help employees take some of the money worries away.
There are many more benefits to consider and will depend on the demographic of your staff team what would work best. A final important benefit employers can offer is flexible working. The right to request flexible working will become a day 1 right sometime next year, but where employers can offer this as standard, employees can even better manage their work/life balance which is becoming more important than ever before.
How Roots HR can help
At Roots HR we see pay levels as one of the main issues employers are facing. Because we want to support the sector, we are currently offering a 10% discount on all salary benchmarking exercises, on orders placed before 30 September 2023. With every order we will also provide you with a free Benefits report containing tips and guidance on how you can enhance your total pay package.
Interested? Contact us to speak to one of our consultants and see how they can help you.