Keeping up staff morale

According to Nicola Sullivan of Employee Benefits magazine, the age of austerity, which munched into private sector pay, reward and jobs as its first course, has now undone its top button before feasting on the public sector for dessert. A new coalition government is waiting at the table, keen to feed on the many cuts that are needed to deal with the country’s deficit. Already on the table are government plans to slash the budgets of unprotected public sector departments by 25 per cent.
Dean Shoesmith, president of the Public Sector People Managers’ Association (PPMA – official supporter of Employee Benefits Live) and head of HR for the London boroughs of Sutton and Merton, is concerned that Chancellor George Osborne has focused too much on cuts and not enough on growth.
Sullivan goes on to say that in June’s emergency Budget, Osborne dished up a number of measures affecting public sector pay and pensions. One of these, a review to be conducted by economist Will Hutton, will investigate pay scales across the public sector as part of efforts to ensure that no public sector manager can earn more than 20 times the salary of the lowest-paid employee in the organisation.
A two-year pay freeze will also be imposed for public sector workers earning more than £21,000 a year. This will not affect the lowest-paid workers, who will receive a £250 pay rise in each of those two years.

Yet Government Business readers will be pleased to hear that these spending cuts do not necessarily have to lead to lower levels of staff morale. Nita Clarke, co-author of the MacLeod Review and director of the Involvement and Participation Association, says: “It is very important, as the budget cuts impact on the public sector, that staff are made the agents of change and not the victims of change. Staff in the public sector know how things could be done better and they know how services could be reconfigured.”
According to the review Engaging for success: enhancing performance through employee engagement, conducted by David MacLeod and Nita Clarke, organisations that are under pressure to cut costs can still improve staff engagement.
The MacLeod review cited the example of the Department of Work and Pensions, which managed to increase engagement levels following a 30 per cent reduction in staff over three years.
A visit to the Employee Benefits Live exhibition and conference on 28 – 29 September 2010 at the Business Design Centre in London will arm attendees with the knowledge to tackle engagement issues in their organisations. Free registration is open now at

In the absence of pay rises, employees’ total reward packages will also be up for negotiation, with more being expected from employers in terms of training and development, and flexible working. Some local authorities are starting to push their total reward package, obtaining staff feedback on after-work clubs, workplace environment and working hours (see case study below).
“Local government has been pushing for the total reward approach for a fair number of years and the unions have pretty much resisted it,” says Rachael McIlroy, policy officer at the Trades Union Congress. “But maybe the time will come when unions will be forced to negotiate on training and development, and flexible working, just to get something out of the bargaining agenda because there is no money for pay [increases].”
Employee Benefits magazine further reports that public sector pensions are also being targeted, with the government announcing a number of changes, including plans to switch the inflation index from the retail price index (RPI) to the consumer price index (CPI) for public sector and state pensions. This means inflation adjustments will be lowered on public sector pensions, which will affect the overall value of workers’ retirement benefits. Towers Watson, Pensions Sponsor at Employee Benefits Live 2010, estimates that, by 2016, a former public sector employee currently receiving a pension of £10,000 will be over £800 a year worse off because of the change.
Pensions and workplace savings are in the spotlight at this year’s Employee Benefits Live exhibition and conference, 28 – 29 September 2010. Amongst the 30 free top-level conference sessions there are six brand new pension sessions deliberately focused on defined contribution schemes (as opposed to defined benefit schemes). These sessions are aimed at HR and benefits professionals within both public and private sectors who are responsible for running and communicating their workplace retirement scheme(s).
There is a Q&A session for anyone who finds pensions talk a little intimidating and wants to hone their knowledge in a jargon-free, HR-friendly environment. There is also a session looking at the new simple government-backed scheme, Nest, coming into play in 2012. The other pension sessions will show how employers such as Oracle, CSC and Telegraph Media Group managed to select, run and communicate pensions to ensure staff are saving enough to be able to retire one day.

As well as pensions, the free top-level conference features a free opening keynote address each morning and many more topical sessions covering issues that affect all employers today, from total reward and engagement to flexible and voluntary benefits. A detailed conference programme can be found at, where visitors can book their free seats.
A number of pension providers and consultants will be showcasing their services at Employee Benefits Live 2010 including Aon Consulting, Buck Consultants, JLT Benefit Solutions, Johnson Fleming, Retirement Education Services, Secondsight and the event’s Pensions Sponsor Towers Watson. The complete exhibitor list of over 100 companies at Employee Benefits Live 2010 are showcasing not only pensions, but also flexible benefits, motivation and incentives, employee engagement and communication, salary sacrifice, benefits technology, voluntary benefits, absence management, health and wellbeing and financial education can be viewed at
As budgets are cut, and pay and benefits are carved up and reformed, it will be the most dynamic, creative and forward-thinking organisations in the public sector who will find ways to continue motivating staff with diminished resources. Decision-makers affected by these issues can visit the Employee Benefits Live exhibition and conference on 28 – 29 September 2010 at the Business Design Centre in London to ensure they are informed and equipped to tackle these challenges.

Free registration is live online at