REWARD STRATEGY
Majority of employers have adopted strategic reward approach, says CIPD
UK employers are increasingly adopting a strategic approach towards reward management, according to a new survey by the Chartered Institute of Personnel and Development.
The survey of over 500 employers found that a strategic approach to reward has been adopted by around two-thirds of respondents. Private sector companies (71%) are much more likely to report having a reward strategy than public sector organisations (46%).
The most common objectives of organisation reward strategies are to recruit and retain high performers (76%), and to support the achievement of corporate goals (83%).
Lack of employee involvement in reward strategy development
Many of the most renowned reward experts tell us that employee involvement is an essential prerequisite for effective reward strategies. Ownership and acceptance is much more likely if you involve people at all stages to the maximum extent possible in the development programme as well as in implementation.
But according to the data gathered by the CIPD, reward strategy development appears largely to be the responsibility of personnel and the board. In short, it is largely a top-down, HR-driven approach.
Sadly, all too many organisations are failing to involve their staff members (12%) or their line manager (35%) in determining their reward strategies. As Duncan Brown, CIPD assistant director-general, comments: "The effectiveness of reward strategies in the UK is questionable when organisations are failing to consult with the very staff they wish to recruit and retain. Employee involvement and communication are inextricably linked to trust which is critical to the delivery of reward strategies in practice."
Effectiveness of reward strategies
Overall, just under three-quarters of respondents (74%) believe that they have an effective reward strategy. How do they know? As many as three-quarters of respondents to the CIPD survey claim to measure the effectiveness of their reward strategy. The most common approach to measuring effectiveness was the use of exit interviews (76% of respondents), followed by external benchmarking (72%), with employee surveys in their wake at 63%.
| Other key findings from the CIPD annual reward survey |
| Equal pay reviews remain a minority pursuit Less than a fifth of organisations have carried out an equal pay audit during the past five years. Of these, 72% claim to have found no significant difference between average male and female earnings. The CIPD's Duncan Brown said: "This is alarming given that the government opted not to force private sector organisations to carry out equal pay audits especially when such an overwhelming majority (89%) favour a voluntary approach. Private sector organisations are effectively on trial and if the situation continues, they will face the requirement that is currently before public sector organisations, which will lead to much more unwanted red tape." |
| Pay bands becoming wider Broadbanded pay structures are the most widespread method of organising base pay for white-collar staff (29%) and the second most common approach for senior managers (25%) and middle/first line managers (32%). What's more, around three in ten organisations plan to move to a broadbanded pay structure in 2003. Job families are also a popular option. |
| Benefits packages set for overhaul As many as 131 organisations are introducing new benefits packages in 2003. Just over two-fifths will introduce a flexible benefits scheme while around one fifth of the sample plan to introduce childcare vouchers. |
A final word
Want to know more?
Title: Reward Management 2003: Survey report, Chartered Institute of Personnel and Development.
Methodology: Survey questionnaire sent in October 2002 to a sample of reward specialists and people managers.
Sample size: Replies were received from 507 organisations employing around 2.6 million employees. As many as 16.2% of respondents were employed in the public sector, while 12.2% were in professional services
Availability: It can be download from www.cipd.co.uk/surveys
The Chartered Institute of Personnel and Development has over 116,000 members and is the leading professional institute for those involved in the management and development of people. www.cipd.co.uk
Posted 3 March 2003