L&D: Providing the living wage – and then what?

By Angela Bingham

When psychological needs are met, individuals can grow, develop and turn into their best self. In this article (the first in a series of four), Angela Bingham, Executive Director of People and Capability at the Open Polytechnic, shares her thoughts on how we can truly invest in our people, starting specifically with how we can support our lowerincome earners.

My opinion when considering how to invest in people at the lower end of the salary scale is to consider four key areas:

1. The starting point – minimum wage or living wage

2. The benefits being offered to staff

3. The remuneration strategy

4. Investing in education.

Let's start at the beginning. The purpose of organisations is to find ways to entice individuals to work for them and to retain them. That enticement comes in many forms, from the brand of the organisation, the value offered to the individual (high salaries, development pathways or grateful to have a job). Gallup’s research tells us that the way we get the most out of our workforce is to meet their psychological needs. Ultimately, we want our staff to be their best selves, all day every day.

So how does that all apply to the living wage conversation?

Minimum wage or living wage?

This year we saw the minimum wage increase 7 per cent, and there is increasing pressure on organisations to ensure staff are on the living wage. My question to you – is it enough to provide staff with just the minimum wage? The answer lies in a number of different economic and political philosophies. US Congresswomen Katie Porter challenged one of the large US banks on the struggle of families who are bringing in minimal wages. This was a great example of how chief executives and boards can become disconnected with the everyday needs of families living close to or below the breadline. The general view was that there was a budgeting issue with low-income families rather than the adequacy of the dollars coming in.

So back to my question – are New Zealand organisations doing enough? Who's responsibility should it be? The government, the employer or the individual? Ultimately, it is a community problem and requires a community solution. For now, I am sure you are focused on the role of the employer.

For some organisations, the increased cost of the minimum wage will put significant pressure on the bottom line. Those organisations balance affordability and equitable remuneration strategies. I believe it's more than a solid remuneration strategy. It is a tricky and essential topic. Different benefits have different value. Some staff want benefits to help them be more efficient (time poor). Others want benefits that they don’t have access to (cash poor). The true solution lies in the capacity to continue the conversation and think broader than just salaries and wages.

The tricky part is that the government sets the tone with our tax structure and the minimum wage. When individuals are in a position of touching the breadline, they too are limited on how they move up the salary grades. So, there is a responsibility of the employer to provide a variety of benefits that will take the pressure off just a bit.

Benefits

• Living wage as a minimum is a solid place to start.

• Considering benefits to staff that save both time and money works additionally well. I tip my hat to organisations like the Open Polytechnic (unashamed bias) where the following are offered:

– discounts on eye tests and a contribution to glasses

– wellness classes – walking groups – social and environment groups

– partnership programmes for computers and software

– employee assistance programmes

– discounts on tertiary study (for some, this could be secondary) for families

– free fees for staff

– discounted school holiday programmes

– discounted café services.

If you are a small organisation, and having employee benefits is out of reach, consider a coalition with other businesses to beef up your buying power. Ask what your people want. There is a story of an organisation that gave its staff gift vouchers of $50 each. The problem was many couldn't afford the items in the store, so a $50 gift card was an insult, not a benefit.

When psychological needs are met, individuals can grow, develop and turn into their best self. That is where you can pump time and money into strengthening your talent management strategies. Until then, take a look at how you pay people.

Remuneration strategy

Dust off your remuneration strategy and see if it still makes sense to your current employees and organisation. I recommend you create your policy as a cornerstone document and then release a strategy each year that responds to the macroeconomic environment. Your strategy should be able to answer these questions:

• Does it reflect a high performing organisation?

• Are you in a unionised environment?

• Does your organisation have roles stretched across many salary bands?

• How do you want to provide equity to all staff in your organisation, reward the high performers, as well as recognise up and coming developmental talent?

• What is affordable?

• What are the current remuneration survey reporting across the public and private sectors?

• Do you couple performance and remuneration?

• Do you couple performance and development opportunities?

Your remuneration strategy needs to reflect both a philosophy of paying salaries and then complement the benefits offered.

Investing in education

It is a well-documented fact (and my opinion) that education is one of the pathways out of poverty. We know that the way household incomes increase is from a solid foundation in education (for the record, education can be an apprenticeship, a qualification or an open badge). Providing benefits that invest in your people's education will always have a positive effect. As the current employer, you may not see the benefit immediately. I encourage the learning and development professionals out there to consider how your corporate programmes can align to our NZQA framework (as a qualification, micro-credential or an open badge) that follows your staff as they move through their career, where they can realise the benefit.

Providing benefits that invest in your people's education will always have a positive effect.

Here is a great quote to leave you with "Train people well enough, so they can leave. Treat them well enough, so they don't want to". Sir Richard Branson.

He aha te mea nui o te ao? He tangata! He tangata! He tangata! Angela Bingham started as Executive Director People and Capability at the Open Polytechnic in October 2018.

Before that she held a variety of leadership roles, with an emphasis in learning and development. She has worked for Kineo (Pacific), ACC, Endeavour IT Limited, Rugby New Zealand, Department of Internal Affairs and ANZ, among others. Angela has a strong people agenda, which she has developed from her degree in Community and Family Studies from the University of Otago. Angela’s philosophies are that an effective leader works for the good of others with a firm foundation in strengthbased conversations.