Case study of performance-related pay in water company

REWARDING PERFORMANCE

Case study of performance-related pay in water company

Severn Trent Water has extended performance-related pay to its frontline staff, according to a case study by IRS.

A new appraisal process, as well as a unified grading structure with eight broader pay bands, accompanied the performance pay matrix. As part of the wage deal from 2006, additional performance-related rises could be triggered if the company exceeds targets relating to profitability, improvements in safety performance and attendance levels.

Severn Trent Water told IRS that it wanted scope to be more flexible and reward employees displaying different performance and contribution levels. But the company was aware that challenges lay ahead, as performance-related pay had been tried for some of these groups in the past and had not been successful.

The process of introducing performance pay arrangements for frontline employees began in 2001. Frontline employees fall into two main categories:

• banded staff, which includes head office and contact centre employees
• process and maintenance workers.

What you will find in this report

The four-page article by IRS looks at

• the establishment of joint working parties (feeding into the joint consultation and negotiating body) to develop ideas and put a plan together
• how the plans were put into practice via a two-year pay deal
• communicating with employees
• evaluating the effectiveness of the new arrangements
• the lessons learned.

Want to know more?

Title: "Performing flexible reward at Severn Trent Water", IRS Employment Review 834/Pay and Benefits, 28 October 2005.

Availability: To purchase this report contact the subscriptions department at IRS in London, tel: 020 8686 9141 or visit www.irsemploymentreview.com

Posted 13 January 2006