Results of CIPD reward management survey 2005

REWARD MANAGEMENT

Results of CIPD reward management survey 2005

UK employers must involve line managers in pay and benefit strategies in order to keep control of wage increases and to ensure money is not being squandered, according to the latest annual survey of pay and benefit practices from the Chartered Institute of Personnel and Development.

The CIPD found that many employers may not be benefiting fully from their new reward schemes because the message is not reaching the rank and file. The majority of organisations continue to involve HR (90%), board members (64%) and senior management (50%) in determining pay and benefit strategies. "Front-line managers are not usually involved," says the CIPD.

 

Key findings of CIPD survey

The fourth in the series of annual reward surveys examines key reward management issues.

Reward strategy As many as 45% of respondents have adopted or are adopting a written reward strategy. The key reward strategy objectives are business-focused. The top priority is supporting the goals of the organisation, followed by rewarding, recruiting and retaining high performers. Effective pay and benefit packages depend on the involvement of line managers with 60% of organisations expecting line managers to communicate the reward strategy. Less than a third of organisations actually involve line managers in developing the reward strategy. The majority of respondents (64%) with a reward strategy assess its effectiveness. The most popular methods are surveying staff views, followed by using HR benchmarking data and exit interviews.

Total reward Only 28% of respondents claim to have adopted a total reward approach, with a higher proportion among private sector firms and larger employers. All sectors believe that they are not doing well at getting front-line managers to implement the total reward approach.

Benefits A quarter of respondents (25%) provide staff with access to an additional voluntary benefits scheme. Only 8% offer flexible benefits. Two of the top benefits to be reduced in 2005 are occupational sick pay and long-term disability suggesting absence management is high on the organisational agenda.

Grade and pay structures Respondents forecast a trend away from using individual pay rates, ranges and spot salaries. Nearly one in five (19%) plan to use a mixture of broadbanding and job families in 2005. As many as 51% of employers plan to use job evaluation in 2005.

Bonuses and incentives There is widespread use of cash bonus and incentive schemes, especially within the private sector. The most common type -- used by 65% of respondents -- is linked to specific business results.

 

Equal pay

Sadly, a large percentage of respondents (47%) have no plans to carry out an equal pay audit in the near future. This proportion is particularly high among small businesses, with the majority assuming that their pay systems are non-discriminatory.

The results of the survey show that the main reasons for survey respondents not planning an equal pay audit are that:

• They simply presume that their pay systems are non-discriminatory (62% of respondents).
• They already use an analytical job evaluation scheme (27%).
• Top management do not see the need for an equal pay review (24%).

Commenting on the findings, Dianah Worman, CIPD diversity adviser, says: "There is still a huge lack of awareness about how equal pay audits can expose underlying bias in the way organisations value female employees. When employees don't feel valued it destroys the way they feel about their employer and damages the trust between employers and workers, which undermines staff commitment, motivation and retention."

Want to know more?

Title: Reward Management Survey 2005, Chartered Institute of Personnel and Development

Methodology: Questionnaires were sent to reward specialists and people managers in the public, private and voluntary sectors in late 2004.

Sample size: Replies were received from 477 organisations employing around 1.5 million people.

Availability: To download the 54-page report in PDF format, free of charge, visit www.cipd.co.uk/subjects/pay/rewrdmansurv.htm

The Chartered Institute of Personnel and Development has over 120,000 members and is the "leading professional institute for those involved in the management and development of people".

Posted 4 March 2005