Lack of career progression and the desire for a higher salary are the two most common reasons people take to the job market and leave their current position. However, career progression leads to higher pay, which means to combat turnover, they shouldn’t be considered in isolation.
Instead, when developing a reward strategy, it makes sense to think about how we link career progression, pay and pay progression.
Here’s what that looks like in practice:
1. Define and articulate your reward principles
It’s easy to fall into the trap of focussing on the detail too much – delivering the annual pay, bonuses or benefits reviews – and forgetting to think about the bigger picture.
So, from the outset, make sure you’re clear about your overarching reward principles. From an organisational perspective, your reward principles should support your vision and values. From an employee’s perspective, they should provide a fair and transparent framework for pay and career progression.
2. Design a career progression framework that works for everyone
A clear career progression framework will enable you to: attract, retain and engage your people; demonstrate how each role contributes towards the business’ objectives; and, illustrate alignment to your organisational values.
Here’s how you can go about putting this in place:
- design a career framework bespoke to your business with job levels, job families, critical roles and your pay philosophy
- evaluate and then map your current roles to the framework
- define core and technical competencies as well as the typical career paths
- align these to other HR processes, like succession planning, recruitment and performance.
3. Develop a pay structure linked to your career framework
Once you’ve established a career progression framework, the next step is to develop a pay structure that’s aligned to your reward philosophy and business strategy, and communicate it clearly and transparently.
Here are some of the key steps:
- define your target market and source the relevant pay data for your organisation
- establish your competitive positioning (eg market median) and refer back to your reward principles. For example, do you want to be flexible and retain key talent or drive internal equity?
- align your internal career framework to the job levels in the salary survey and carry out market analysis to develop pay ranges.
- carry out an impact analysis showing the risks and costs of implementation
- build a business case to get senior management approval
4. Determine how pay will progress alongside people’s careers
Once you’ve developed a pay structure, the fourth and final step is establishing a pay policy and how your employees’ pay will progress over time.
The private sector practice on progression (2014) report from the Incomes Data Services, found 74% of organisations have a pay progression framework in place where an individual’s salary increases over time.
The research showed that the most common factor considered when determining pay progression was performance. That said, more and more organisations are now starting to take a combination of criteria, like skills and behaviour, into account as well.
Whichever road you go down, the important thing is to be clear about what determines base salaries in your business, and which factors you or your leaders need to be aware of when progressing pay.