CASE STUDY
Airbus overhauls white-collar pay
A new case study by e-reward highlights how pay arrangements in a "leading-edge" manufacturer differ from those in the service sector, where individual performance pay and variable bonuses have been considered the norm for at least a decade.
In Airbus UK, the principle of performance pay had long been argued over, and resisted by the unions. But a partnership approach to the issue, whereby unions and management work together to resolve organisational problems, and the work of a joint management-union project team has breached the principle, and resulted in new arrangements for the 2,800 unionised white-collar staff.
These achieve the company’ s objectives of rewarding good performance and relating pay to the market, while meeting union members’ concerns over fairness and consistency. Concerns over equal pay have also played a part in setting up the new arrangements.
Airbus has retained spot rates for 5,000 manual staff, in the face of fierce opposition to any alternatives.
Company profile: Airbus
| Name | Airbus UK. |
| Employees | 10,000 in UK (including 2,800 white-collar and 5,000 blue collar staff). |
| Location | Filton and Broughton. |
| Business activities | Design, engineering and assembly of wings for Airbus aircraft. |
| Trade unions | Amicus and EESA (white-collar) Amicus, T& G and GMB (manuals). |
| Web site | |
| Interviewee | e-reward.co.uk interviewed Stephen Dumbleton in December 2004. Stephen is compensation and benefits manager, Airbus UK. |
| What you will find in this report | Page no. |
| In this 14-page case study (4,700 words), written and researched by e-reward, we see how a unionised manufacturing organisation has worked with its unions to introduce performance-related bonuses (variable pay) and consolidated salary increases for individuals who increase their level of contribution to the business. | |
| Executive summary | 5 |
| Company profile -- overview | |
| Background | 5 |
| Manufacturing facilities -- union arrangements -- union opposition to performance pay | |
| Approach to reward | 6 |
| Company’ s objectives -- performance pay -- equal pay | |
| Shopfloor pay | 6 |
| Spot rates -- collective bargaining | |
| White-collar pay | 6 |
| Previous structure -- minimum and maximum pay rates -- moving forward -- partnership with unions | |
| Project management team | 7 |
| Make-up -- process | |
| Designing the new structure | 7 |
| Job descriptions -- role feature statements -- six levels | |
| Dividing pay bands into zones | 8 |
| Three broad zones — incremental -- target -- enhanced | |
| New grade for direct entry graduates | 10 |
| Advanced professional developing -- requirements -- variable pay | |
| Assimilation | 10 |
| Move to nearest incremental point -- no "red circling" | |
| Pay progression | 10 |
| Performance and development review -- increments -- "grandfathering" process | |
| Appraisal process | 11 |
| Task objectives -- tangible successes -- ratings scale -- behaviours | |
| Variable pay for white-collar staff | 13 |
| Non-consolidated, lump-sum bonuses | |
| Appeals process | 13 |
| Grievance procedure | |
| Communication and training | 13 |
| Newsletters -- training for managers | |
| Managerial pay | 13 |
| Six-band structure -- pay progression -- annual awards -- variable pay -- profit-sharing | |
| Recognition | 14 |
| Non-payroll awards -- directors’ award -- awards for excellence | |
| Benefits | 14 |
| Recent innovations -- final salary pension scheme | |
| Problems and lessons learnt | 14 |
| Still early days -- good value for what has been achieved -- a final word | |
| List of boxes | |
| 1: Pay bands for white-collar staff, effective 1 January 2005 | 9 |
| 2: Airbus key behaviours | 12 |
Want to know more?
Title: Airbus overhauls white-collar pay.
Issue no.: e-research no. 29.
Date: January 2005.
Pages: 14 (4,700 words).
Availability: Published by e-reward.co.uk. Click on "Research Reports" on the left-hand navigation panel of the e-reward.co.uk web site and complete the simple online subscription form at www.e-reward-data.co.uk/content/ResearchReports.asp
For more details email: paul@e-reward.co.uk
Posted 23 March 2005