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Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Thursday 23 Jan 2014
The 4 Rs of HR

The 4 Rs of HR

Acronyms are the life-blood of many businesses, just as much as jargon is the bane of many employees. In some environments they may be appropriate – but these should only ever be situations where everyone within earshot understands what the terms mean. Anything less is unwarranted, at best, or exclusionism, at worst.
But love them or hate them, buzzwords seem to have an innate ability to stick around. Certainly, there are four which are sure to be heard in Boardrooms around the UK over the next few months. With so much news about a growing economy, Mark Carney’s view on employment, and our ageing population you may have heard them already. 

It used to be said that everyone had to know the 3 Rs to get ahead in business. Not anymore. Today’s Boardrooms are, of necessity, dominated by talk of four. In fact, no meeting would be complete without the use of at least one, if not all, of the following buzzwords: results, reward, recognition and retirement. 

We may be witnessing an economic recovery, but there is still continued pressure on business results and this means that HR teams won’t be looking at pay in isolation. This year, the type of results organisations are striving towards centre around profitable growth, meaning that costs, including pay, will continue to be scrutinised heavily. Our own Report on Jobs, compiled with the help of the REC and Markit Economics, suggests that the jobs market is steadily improving, but this doesn’t mean that better results will lead to better reward across every employee’s desk.

On the contrary, whilst the next twelve months are likely to be remembered as the year pay rises came back into fashion, the good news will be couched by a clearer focus on individual results. Those employees who are performing better, or where market forces are demanding higher salaries for certain roles, will be the ones to benefit.

Pressure on results also means that total reward spend will be examined more holistically than ever before by HR teams. It should lead to line managers making evidence based decisions based on the return on investment they anticipate from each member of staff. 

In other words, now is an ideal opportunity for organisations to take stock of what they provide to employees in their total reward package. Comprehensive data linked to other key people indicators are a vital tool for this if employers are to provide the most efficient and effective reward package to their staff – and this is why organisations should ensure they have effective ROI measures in place.

Using data to make evidence based decisions can also stop the common myth that throwing money at the problem will retain people. The truth is that many employees want recognition for the contribution they make in ways that go beyond a monthly paycheque. No one can argue that pay is unimportant, but for many, the fact their contribution is recognised and they feel valued is key. Recognition doesn’t have to cost anything, and HR has a responsibility to ensure line managers never forget how much effect a simple ‘thank you’ can have. 

But ensuring people are thanked for their efforts isn’t where HR’s role should stop. Against a backdrop in which a new single tier State pension has been created, auto-enrolment has meant more people are saving for their future, and a new Defined Ambition Pensions Framework has been launched, the year ahead will be one in which employers and employees thoughts should turn to retirement planning. For many the question will be how to get the right balance between retaining key skills and facilitating retirements for employees at the end of their working life. 

Successful organisations will be taking a step back and looking at the 4Rs together as failure to do so is likely to limit how they move forward in 2014. They may be buzzwords – but HR teams would do well to remember that they have become so for a reason.

Robert Bolton is a partner at KPMG and Ingrid Waterfield is UK head of performance & reward at KPMG