REWARD MANAGEMENT
Reward packages becoming more market led, says CIPD
A central theme emerging from a new survey by the Chartered Institute of Personnel and Development is the consolidation and expansion of the importance of market rates in determining salary levels in the UK, coupled with a strong emphasis on individualised pay.
The 917-employer survey also found that private sector organisations are focusing reward and benefit resources on senior management, but there is increasing emphasis on performance-related reward across all occupational groups.
Reward systems are poor motivational tools
Perhaps unsurprisingly, most organisations were largely positive about the effectiveness of their reward management processes in supporting their business objectives.
But they were not nearly as confident about their effectiveness in motivating employees: only 4.2% said that their reward package was very effective at motivating employees, compared with 37% who reported that they had no effect. An alarming 7% felt the reward package had actually demotivated staff.
| Key findings of CIPD survey |
| Organisations pursue gradual, evolutionary change, rather than rapid reorganisation |
| The CIPD reckons that most organisations are gradually evolving their reward schemes, "rather than engaging in the perpetual revolution that is often portrayed in the press". It found that turnover in reward schemes and the replacement or phasing out of schemes is "very low". |
| Increasing use of variable pay |
| More than one in ten survey respondents were planning to increase the proportion of variable pay in the total pay package of senior managers by over 5% in the year ahead. Three in ten planned to raise variable pay levels for manual non-management staff by as much as 5%. |
| Reward packages fail to address people's needs |
| The survey suggests that business objectives, rather than people needs, remain the key priorities for most organisations. For example, when respondents were asked to indicate the three main priorities of their reward strategy, the focus was very much on recruiting and retaining highly-skilled employees rather than achieving better work-life balance. Says the CIPD: "The data suggests that there is an increasing challenge for reward practitioners to reconcile the growing gap between the goals of the organisation for reward and the needs of individuals." |
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| The core benefits of sick pay, additional holidays and life assurance dominate the benefits package. But the most noteworthy growth area is the spread of flexible benefits: 12% of respondents plan to introduce flex in 2002. |
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| Over one in five organisations report that their employees do not receive any pay information other than on their own salaries, and two-fifths of organisations do not communicate their reward packages through face-to-face discussion with managers. As the CIPD concludes: "The communication of reward programmes in the UK is often minimal, does not encourage transparency and largely excludes employee involvement in changes to design of reward practices. This is despite evidence from research and leading practitioners that reward communication and transparency is necessary for effective reward management." |
A final word
"Reward in the UK is becoming more individualised, customised and market orientated, which is proving effective in meeting business objectives. The public sector is becoming more market orientated but retains much of the traditional reward practices." – Chartered Institute of Personnel and Development.
Want to know more?
Title: Reward Management Survey Report, January 2002, Chartered Institute of Personnel and Development.
Methodology: The data was gathered by a postal questionnaire sent to 5,000 reward specialists and people managers in Autumn 2001.
Survey sample: The survey is based on information provided by 971 respondents employing 4,764,069 people.
Business sectors: 15% of respondents were in manufacturing and 13% in business services. More than half of organisations surveyed employ more than 500 people, while one in ten employed less than 50 people
Availability: You can download a copy of the report, free of charge in PDF format, via the Chartered Institute of Personnel and Development's web site . . . www.cipd.co.uk. Click on "Infosource" and then select "CIPD surveys and reports." The documents are listed in alphabetical order, so you will need to scroll down to "Reward Management".
Posted 1 March 2002