Most organisations review salaries every year. But how often do they review the assumptions sitting underneath those salaries? AI and automation are changing jobs. Scarce skills are emerging in new areas. Operating models are evolving, and organisations are competing for talent in markets that do not always fit neatly into traditional salary structures. Yet many reward frameworks remain largely unchanged.
This raises several questions worth asking.
- Are jobs changing faster than your job architecture?
AI may not eliminate a job, but it can materially change it. Routine work may reduce while judgement, problem-solving and decision-making become more important.
What does this mean in practice? Identify roles experiencing significant change and test whether job profiles, grades and career paths still reflect the work being performed.
Not every change requires a regrade, but material changes in accountability, complexity or capability should trigger a review.
- Are you paying for the capabilities you will need next?
Being business-critical and being scarce are not the same thing. Some capabilities may be strategically important but readily available. Others may create significant business risk because they are difficult to attract or retain.
What does this mean in practice? Look at vacancies, recruitment lead times, turnover, counter-offers and external talent supply. Then determine where market premiums, faster salary progression, retention arrangements or differentiated incentives are genuinely justified.
The objective is not to pay more everywhere, but to know where paying differently makes sense and why.
- Do your incentives still reward what matters?
Strategies often change faster than incentive schemes. Measures and weightings that made sense three years ago may no longer reflect today’s priorities.
What does this mean in practice? Test STI and LTI scorecards against the current strategy. Are you rewarding outcomes such as productivity, customer experience, operational efficiency, technology adoption and strategic execution or primarily measuring what has always been measured?
There is also a new question emerging: if technology creates significant productivity gains, how should that value be shared?
- Are retention interventions solving the problem or postponing it?
Retention bonuses and counter-offers can be useful, but repeated interventions may indicate deeper issues with market positioning, career opportunities, leadership, workload or the employee value proposition.
What does this mean in practice? Distinguish between short-term retention risk and structural reward problems. Every intervention should have a clear rationale, timeframe and exit point.
- Can you explain why people are paid what they are paid?
Pay decisions are under increasing scrutiny. Organisations need to explain why jobs are graded at particular levels, why employees performing similar work may be paid differently and how employees progress through salary ranges.
Look beyond market averages. Examine compa-ratios, range penetration, internal pay gaps, market positioning and salary progression, and investigate differences that cannot readily be explained.
What does this mean in practice? Ensure clear decision rights, defined approval authorities, documented remuneration principles and reliable data support decisions on appointments, increases, promotions, market adjustments and exceptions.
The test is simple: Why did we make this pay decision — and can we defend it with evidence?
- Is your reward framework flexible enough?
Consistency matters, but consistency should not mean rigidity. Different skills may compete in different talent markets, and scarce capabilities may move differently from the broader salary market.
What does this mean in practice? Be clear about where differentiation is allowed, the criteria that must be met and who approves it. Market premiums, retention payments and other exceptions should also have review dates.
Otherwise, today’s solution to a retention problem can become tomorrow’s pay-equity problem.
So, what should organisations do?
This does not necessarily mean redesigning the entire reward framework. Start by stress-testing what you already have.
Are job profiles still accurate? Are grades still appropriate? Which capabilities are genuinely scarce? Are salary ranges aligned with the talent markets in which you compete? Can pay differences be explained? Do incentives reflect the current strategy? And where is greater flexibility needed?
A reward framework should help the organisation attract, retain and motivate the capabilities needed to deliver its strategy while keeping remuneration fair, competitive, affordable and appropriately governed.
If your jobs, skills, technology and business model are changing, but your reward framework has remained largely unchanged, at what point does the framework itself become the constraint?