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A better balance

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When the social contract between companies and employees is uneven and dysfunctional we destroy value for everyone.

Witness the current debacle at Asda, where shop workers – most of whom are women – argue they should be paid equally to the distribution centre employees because their work is of equal value.

The Equality Act 2010 and its predecessor the Equal Pay Act 1970 were designed to ensure that workers receive equal pay for equal work. Quite reasonable and straightforward.

Yet the Asda claims have been 11 years in legal wrangling awaiting settlement – nearly 25% of a working life. So maybe it’s not that simple.

Last week the Court of Appeal reaffirmed decisions by lower courts in favour of the shop workers. Now a tribunal has to determine whether the shop worker and distribution roles are of equal value, and whether there is any reason beyond sexual discrimination for not paying them equally.

Whilst all this goes on the workforce is strained and stressed, wellbeing is put at risk, trust in the employer is diminished, productivity is hit, and the company brand is damaged.

If Asda shop workers prevail then they are due compensation, though it may not account for indirect impairments during such a long period of underpayment, as well as the loss of other benefits like pension contributions. The whole retail industry is watching; some estimates put the potential compensation bill across the big four supermarkets at £8 billion.

But if you think the argument is all about money you would be wrong.

Asda’s workers aren’t just chasing a bigger pay packet. They are seeking justice. Like all of us, they want their work to be rewarded fairly and based on its value. When this is not experienced, trust in the employer is undermined – and legal claims ensue.

You can look at this as a risk; to be managed by labour relations, legal judgements, employment policies and compliance. Or, like me, you can look at it as an opportunity to establish a better balance between the needs of the company and the worker.

For a social contract to work successfully it has to be balanced, where both parties have their objectives and expectations fulfilled. Transparency and fairness are basic qualities which should be found in the DNA of any company.

The Financial Reporting Council has caught on here. The body responsible for guiding listed companies on reporting standards has recently published a set of principles in the Corporate Governance Code to address public concerns over the imbalance in remuneration – from excessive executive remuneration, to gender pay gaps.  Management is encouraged to demonstrate to UK PLC Boards that employee rewards, culture, and attitudes across the organisation – from executives to shop floor – are fair, valued, and balanced.

Whilst companies only have to either comply with the principles of the Code, or explain why they have elected not to do so, this is nevertheless progress and a more transparent approach is being promoted.

To quote the historian Rutger Bregman at Davos ‘19, ‘this is not rocket science.’ You don’t have to look too far for examples of what happens when societies, regimes and organisations embrace inequality.

So what is to be done?

My belief is that digitisation in organisations will drive the democratisation of workforce information, create greater transparency, uncover any unfairness, and keep companies on a path of balanced employee rewards. Complying with the Code should be commonplace and provide multiple benefits.

Centralising, accessing, and analysing workforce data to inform action is just the beginning. Digital innovations can be used to put more control in the hands of employees over how and when they consume the rewards for their work.

Companies can use technology to engage in more personalised, meaningful ways with their workforce to provide services and support in their wellbeing – be it professional, financial, physical or mental.

Individuals should be able to tailor their rewards to what they value, based on their work and life priorities – parents might prefer more leave, young workers more cash, and those nearing retirement some planning guidance.

Does this mean that the labour tribunals and legal battles will be a thing of the past? Probably not.

That’s not the point, though. In today’s climate we should be grasping the opportunity to improve the social contract with more transparent and fair workforce practices.

Thus finding a better balance.

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