Major shift in how salaries and benefits are determined in South Africa

South African companies on hiring sprees are becoming more employee-centric, says professional services group PwC, which is leading to a permanent shift in how they determine salaries and benefits.

The group published its latest Executive Directors Report for 2022, outlining how companies are restructuring working arrangements and remuneration packages to retain talent, coming off the need to balance strategic and operational goals with shifting employee expectations.

Recent PwC research showed that, in the wake of the pandemic, employees feel empowered by their circumstances and are ready to ‘test’ the market where their salary expectations and working arrangements are no longer met by their current employers.

“The truth is, employees with specialised skills and training are in demand — and they know it,” said PwC.

“Employers no longer have the upper hand, relying simply on increases in guaranteed pay as their retention strategy — employees of today seek higher levels of work-life integration, and this is a process of negotiation,” it said.

PwC said that an organisation could continue to drive growth and attract highly skilled employees by redesigning how remuneration is managed.

“Companies must act swiftly to define their hybrid work model, make changes to processes and operating models, revamp strategic planning and, most importantly, re-look at remuneration arrangements, which all together attract and retain talent,” said PwC.

Companies should expect employees to have more bargaining power and negotiate hard for what they now see as minimum requirements. Benefits such as career growth and upskilling opportunities, competitive packages and perks are becoming the norm.

Regarding benefits, new business models move away from hyper-focusing on market benchmarks, cost analyses and efficiency in administration to a more employee-centric model when considering rewards or benefits, PwC said.

New business models now take career development, performance, alignment of organisational values, purpose and value-based personalisation into account when offering rewards or benefits.

PwC’s findings echo the words of Shargani Pillay, remuneration and benefits manager at tobacco company JTI. Speaking at an Xpatweb conference, Pillay said to retain valuable employees, companies would need to incentivise staff to not only stay with the company but stay motivated to work

Alternative benefits have come into existence since flexible work has become the norm. An example of unique employee motivation could be seen when working from home during load shedding.

Pillay said that JTI offered its employees a subsidy to purchase products such as power inverters which would make working from home more approachable.

Hybrid work

Flexible work hours or arrangements have almost become a minimum requirement for companies. PwC added that hybrid work is here to stay and should be available to everyone in a business – if offered.

According to the group, the majority of employees who worked remotely as a result of the pandemic say that they are more productive and have grown accustomed to better quality and integration of work and life.

“Everyone deserves the same degree of flexibility — it is not a generational need; every employee, at any age, benefits from, and is looking for, its availability.”

PwC said that businesses could leverage digital platforms to enable hybrid work and ensure good governance processes are in place to manage and track progress over time.

Digital platforms can further help prevent proximity bias when it comes to promotions. Some systems offer helpful reporting and analytics dashboards to gain insights into matters, it said.

PwC added that companies must draft clear rules and create secure structures for hybrid work if they wish to not play ‘catch up’.

It is then essential that if a company is willing to make the shift to hybrid work or remote working arrangements on a full-time basis, they align themselves with South African labour law, said Abigail Butcher, associate in the Employment Law practice at Cliffe Dekker Hofmeyr.

Consideration needs to be given to what is the place of work for a company if it is determined through workplace practice or terms and conditions.

“If the employees’ working arrangements including place of work are set out in the contract of employment, this may require that any change to the working arrangements be affected with the employees’ consent, said Butcher.

Read: Here’s how much money top CEOs and executives earn in South Africa now.