Competency-related pay decreasing in prevalence

REWARDING PERFORMANCE

Competency-related pay "decreasing in prevalence"

"The application of competencies to reward represents their 'final frontier', but one that now seems unlikely to be crossed by most competency users." That's the main conclusion of a new study by Industrial Relations Services which found that just over a quarter of employers that have introduced competency frameworks tie them to reward.

Continued growth

Whilst competency-related pay is still languishing on the periphery of mainstream reward practice, the ninth in the annual series of benchmarking studies conducted by the IRS journal Competency & Emotional Intelligence discovered that overall more and more organisations are making use of competencies.

"Despite two decades of considerable activity, the take-up of competencies has not yet reached saturation point," says Neil Rankin, the author of the IRS report.

Key findings of IRS research:

Most organisations are devoting time and resources to reviewing and revising their competencies.

There has been a move away for vague, generic lists of competencies towards more sharply focused frameworks with more obvious relevance to their end users.

More organisations are developing sets of technical (job-related, skills-based) competences to "supplement and amplify their behavioural competencies".

Main uses of competency frameworks

At present, employers use competencies for several personnel processes:

• Over eight in 10 employers (81%) that have introduced competency frameworks use them as the basis for appraisal or performance management.
• Second in terms of prevalence comes the use of competencies in personal-development processes (75% of organisations).
• Just under three-quarters (74%) take account of competencies in selection, while less than two-thirds (61%) use them in recruitment.
• 29% of the organisations have competency-related pay.

As Neil Rankin observes: "Typically, many organisations begin their use of competencies for developmental purposes; now many are also applying them to selection (and, in some instances, to recruitment, too)."

A final word

"Competencies represent the language of performance. They can articulate both the expected outcomes from an individual's efforts and the manner in which these activities are carried out. Because everyone in the organisation can learn to speak this language, competencies provide a common, universally understood means of describing expected performance in many different contexts." - Neil Rankin, Competency & Emotional Intelligence Benchmarking, 2002

Want to know more?

Title: "Raising performance through people: the ninth competency survey", by Neil Rankin, Competency & Emotional Intelligence Benchmarking, 2002.

Methodology: The 44-page study is based on four sources:

• a survey questionnaire completed by 121 employers, conducted by IRS in January and February 2002
• in-depth follow-up interviews in 35 organisations
• case studies of five employers
• an analysis of competency frameworks supplied by 72 participating employers.

Sample size: Based on research into 121 employers’ practices, of which 78% are current users of competencies and a further 15% are in the design or development stage of their implementation. The survey orgnisations have a combined workforce of 797,00 people.

Business sectors: The survey has a "good spread across the main economic sectors and according to workforce size".

Availability: Contact Industrial Relations Services, 18-20 Highbury Place London, N5 1QP, tel: 020 7354 6746.

Web site: To find out more about IRS, jump to www.irsonline.co.uk.