PAYING FOR PERFORMANCE
A third of UK workplaces use merit pay
Although merit pay is one of the most widespread of techniques used to link pay to performance, contrary to the received wisdom, the vast majority of workplaces in the UK do not, in fact, use this remuneration tool. The most representative study of the British economy suggests that 35% of workplaces operate merit pay for their non-managerial staff.
Good quality empirical research into the prevalence of merit pay in the UK remains surprisingly sparse, although it has come under the scrutiny of a number of researchers in recent years.
As part of a major research project e-reward.co.uk is undertaking on behalf of the Chartered Institute of Personnel and Development, we have obtained some previously unpublished data on the incidence of merit pay across the UK economy. These fascinating details come from the vast database of the Workplace Employee Relations Survey (WERS), the fourth in the series of surveys that began in 1980.
About WERS
In broad terms the scope of the survey extends to cover all but the smallest workplaces in Great Britain. It covers both public and private sectors and almost all areas of industry. A consortium of government, executive agencies and research bodies funds the research.
Managers and worker representatives in over 2,190 workplaces with 10 or more employees were interviewed between October 1997 and June 1998 about all aspects of employment relations in their workplace. Almost 30,000 employees in those workplaces completed a questionnaire. The results are statistically reliable and fully representative of British employment in all bar the smallest workplace.
Merit pay the norm in financial services
The main conclusion of previously unpublished data provided to e-reward.co.uk by the WERS 1998 Data Dissemination Service is that 35% of workplaces operate merit pay for their non-managerial employees.
It probably comes as no surprise that merit pay is most widespread in financial services — 85% of workplaces report merit pay for some non-managerial employees. Wholesale and retail had the second highest proportion of workplaces with some non-management grades covered by merit pay (55%), followed by electricity, gas and water (49%).
Do any non-managerial in the workplace receive payments of have their pay increased through merit pay?
| Business sector (standard industrial classification 1992) | Per cent of workplaces with merit pay* | Sample size: weighted | Sample size: Unweighted |
| Manufacturing | 31% | 287 | 299 |
| Electricity, gas and water | 49% | 5 | 80 |
| Construction | 29% | 92 | 112 |
| Wholesale and retail | 55% | 421 | 318 |
| Hotels and restaurants | 37% | 169 | 127 |
| Transport and communication | 37% | 99 | 136 |
| Financial services | 85% | 68 | 101 |
| Other business services | 42% | 247 | 227 |
| Public administration | 30% | 104 | 183 |
| Education | 15% | 283 | 243 |
| Health | 20% | 305 | 246 |
| Other community services | 28% | 111 | 110 |
| Total | 35% | 2,190 | 2,183 |
* Survey covers workplaces with 10 or more employees.
Source: Workplace Employee Relations Survey 1998: Cross-section. Tabulations provided by the ESRC-funded 1998 Workplace Employee Relations Survey Data Dissemination Service at the National Institute of Economic and Social Research, 14 December 2000.
Want to know more?
Title: The 1998 workplace employee relations survey
Analysis: The primary analysis of WERS 1998 was published by Routledge in two volumes:
Britain at work: as depicted by the 1998 workplace employee relations survey, by Mark Cully, Stephen Woodland, Andrew O’ Reilly and Gill Dix.
All change at work? British employment relations 1980-1998, as portrayed by the workplace industrial relations series, by Neil Millward, Alex Bryson and John Forth.
Want to know more?
Results from the 1998 Workplace Employee Relations Survey are now available online. This vast database provides some fascinating details on a broad range of industrial relations and employment practices across almost every sector of the economy in Britain.
The service offers free access to a wealth of information on payment systems and pay determination (section F).
Users can access this online service at . . . www.niesr.ac.uk/niesr/wers98/index.htm