E-reward.co.uk unveils results of large-scale contingent pay survey

CONTINGENT PAY

E-reward.co.uk unveils results of large-scale contingent pay survey

Contingent pay is one of the most common people management techniques but there is something of a dearth of high-quality, timely information on the subject. To fill the information gap, e-reward.co.uk has undertaken an in-depth survey on every aspect of contingent pay to find out more about its relevance in today's organisations.

Conducted in late 2003 and early 2004, the survey carried out on behalf of subscribers to e-reward.co.uk research reports produced up-to-date and revealing information from senior HR and reward practitioners in 100 organisations -- in both private and public sectors -- on what is happening to contingent pay in the UK.

Contingent pay defined

Any type of pay which is related to performance, competence, contribution, skill or service. Contingent pay may be related to the results achieved by individuals, teams, large parts of the organisation or the organisation as a whole.

Contingent pay may be consolidated in the base rate and pay progression according to performance may take place within the pay bracket attached to a grade or within a zone in a broadbanded structure.

Contingent pay may, however, be paid as a cash bonus and this is likely to be the case when the pay is related to team or organisational performance (this is sometimes called variable pay).

Incremental pay scales where progression is related to service may have an element of performance-related pay if there is the scope for withholding increments or paying accelerated or additional increments.

Purpose of the e-reward.co.uk survey

• obtain information on current contingent pay policies and practices operated by UK organisations
• the debate on what works, how well it works and why it works -- if it works at all -- continues, often on the basis of opinion rather than fact
• provide factual information which will inform the debate
• offer guidance to organisations on their contingent pay policies and practices.

Focus of survey

• organisations in the UK with performance, competence, contribution or service related pay schemes or using skill-based pay
• provides analysis, information and a unique insight into the practice of contingent pay in the UK
• draws on questionnaire returns received from 100 UK organisations employing 1.2 million people
• practical reality of introducing and operating contingent pay scheme from the perspective of HR and reward managers who spend a good deal of their time managing pay systems.

 

This in-depth study, researched and written by our in-house reward experts, is published in two parts.

Part 1

• reports surveys results
• offers an overview of the survey -- size and scope.

Part 2 (to be published in a forthcoming issue of e-research)

• detailed analysis and interpretation of survey findings
• comparison of contingent pay schemes and conditions when they are likely to be appropriate
• assessment of recent research evidence regarding prevalence of schemes
• description of purpose and features of contingent pay
• evaluation of criteria needed to be taken into account when selecting a scheme
• guide to steps required to develop a contingent pay scheme
• examples of approaches adopted by leading organisations.

Questions answered by e-reward.co.uk survey

• what types of contingent pay schemes are used
• how organisations use contingent pay
• the use of ratings and alternatives to ratings
• timing of performance and pay reviews
• employers' views on the effectiveness of contingent pay schemes
• whether or not organisations undertake formal evaluations of the effectiveness of schemes
• what kinds of problems employers are experiencing and how these are being overcome
• conditions for success in contingent pay scheme design and operation.

What you will find in this survey report	Page no.
The survey, which is one of the largest research projects in recent years in this field, provides invaluable decision-making information about the practice of contingent pay. This is a subject of abiding interest at national (government) level as well as within organisations.
Introduction Purpose of survey -- Focus of survey -- Contingent pay defined -- Questions answered by survey	6
Executive summary Overview of the survey -- Survey responses -- Key survey findings	8
Chapter 1: E-reward.co.uk survey details Methodology -- Number of participants -- Business sectors -- Workforce size -- Validity	11
Chapter 2: Grade and pay structure Type of grade and pay structure operated by organisations	13
Chapter 3: Types of contingent pay schemes used What type of contingent pay scheme do organisations use? -- Individual performance-related pay -- Contingent pay for individuals -- Pay related to organisational performance -- "New pay" practices -- Service-related pay -- Contribution-related pay -- Numbers of schemes -- Cash or consolidation?	14
Chapter 4: Methods of pay progression Rating performance -- Deciding performance pay increases -- Doing without ratings -- Links between performance review and pay review -- Guidelines -- The size of awards	21
Chapter 5: Objectives of contingent pay Reasons for using contingent pay	25
Chapter 6: Does contingent pay work? Impact on performance -- Factors contributing to the level of impact -- Evaluating the effectiveness of contingent pay	27
Chapter 7: Lessons learnt Criterion for contingent pay -- Performance management processes -- Basis or formula upon which contingent pay decisions are made -- Guidelines used for contingent pay reviews -- General advice on the process	35
Chapter 8: Conditions for success Success criteria	48
Appendix A: List of 100 survey participants	57

Want to know more?

Title: What is happening in contingent pay today: Part 1 — Survey findings.

Issue no.: e-research no. 18.

Date: January 2004.

Pages: 57 (16,300 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 9 March 2004