Homepage Education Events Research Resources Executive Pay
Show News
  1. Home
  2. News
  3. Merit pay continues to dominate pay setting

Merit pay continues to dominate pay setting

REWARDING PERFORMANCE

Merit pay continues to dominate pay setting

A new survey by the London-based pay analysts Industrial Relations Services has found that more than six in ten of the private sector companies polled are now employing an element of merit pay, up from just over half in 2000.

The survey also notes that "an appetite for change is apparent", with 50.2% of respondents planning changes to their reward strategy in the next 12 months. As in previous years, the introduction of flexible benefits has been considered most frequently by respondents, with competency-related pay, merit pay and broadbanding also proving popular.

What about the alternatives to merit pay?

The evidence from the 241-company survey suggests that many of the alternatives to merit pay advocated by commentators remain minority pursuits in the UK.

In summary, IRS finds:

  • Pay for competencies (used by 17.4% of respondents) is not yet a major feature of the reward landscape.
  • Only 7.5% of organisations use team-based pay, with a further 4.1% considering this approach.
  • Linking reward to the acquisition and use of skills is still languishing on the periphery of current reward practice - it was reported by 10.8% of survey respondents.
  • Gainsharing - which links remuneration to organisational gains such as sales, expenses and productivity - is the least popular of the reward practices IRS surveys, ranked 13th in terms of usage.

Reward practices in UK private sector organisations, 2002

 

Using (per cent of respondents)

Considering (per cent of respondents)

Merit pay

63.9%

14.1%

Market-linked pay

52.7%

7.9%

Incentive payments

31.5%

3.7%

Stakeholder pension

26.9%

3.3%

All-employee share schemes

22.4%

2.1%

Profit-sharing scheme

22.0%

2.9%

Broadbanding

18.3%

13.3%

Competency-based pay

17.4%

19.0%

Unconsolidated lump-sum

16.6%

5.0%

Skills-based pay

10.8%

10.4%

Flexible benefits

10.8%

23.2%

Team-based pay

7.5%

4.1%

Gainsharing

0.8%

1.2%

Source: Industrial Relations Services.

Want to know more?

Title: Settlements set to rise slightly — pay prospects survey 2002 , IRS Employment Trends 763/Pay and Benefits, 11 November 2002.

Methodology: The data was gathered by postal questionnaire mailed to IRS subscribers and non-subscribers during September 2002.

Sample size: The survey was based on the views of senior remuneration, industrial relations and personnel managers in 241 private sector companies in the UK.

Business sectors: More than half of respondents were in services and four in ten were in manufacturing. There was a particularly large response from general services (26.1% of participants), followed by engineering and metals (18.3%) and general manufacturing (9.1%).

Availability: Contact the subscriptions department at Industrial Relations Services, tel: 020 7354 5858, or visit www.irsemploymentreview.com

Posted 2 January 2003