REWARDING PERFORMANCE
Six in 10 UK employers plan changes to reward practices, says IRS
Private sector organisations are increasingly looking at ways to reward employees for their contribution to personal and business achievements, according to new research by Industrial Relations Services, the independent pay analysts. As many as 58.9% of employers polled by IRS were considering revisions to their reward practices.
Published annually, the IRS survey provides a useful snapshot of the latest innovative thinking and principal approaches to performance pay across the UK private sector. There is something of a dearth of empirical evidence on the extent of performance-related pay arrangements in the UK. Although the IRS survey is not based on a scientifically-structured sample of the economy, it does cover a broad range of industries spread throughout the private sector.
Based on information provided by 226 human resource professionals, the survey is relatively small-scale and something of a self-selecting sample, yet it provides a wealth of insights into contemporary trends in performance pay. Practitioners and researched are pleased for any new source of data in an area renowned for its paucity of high-quality information.
The overall picture painted by the research is somewhat mixed. While a number of the 13 reward practices examined by IRS are more widespread than a year ago — take, for example, pay related to skills, competency and the market — others have fallen back, most notably broadbanding, profit-related pay and merit awards.
In summary, IRS finds:
58% of respondents use merit pay schemes, with market-linked pay in their wake at 48.7%. Besides incentive payments (28.3%) and profit-related pay (26.1%), all the other forms of reward programme are operated by less than a quarter of respondents.
Despite widespread media interest, flexible benefits have yet to take-off — just one in 20 respondents (5.3%) now operate flex schemes, although a quarter expect to introduce such a package in the near future. However, it is worth noting that a year ago 29.4% of respondents to the IRS survey said they were planning to introduce flex in the next 12 months. Few appear to have translated those intensions into action.
17.7% of respondents claim to have introduced broadbands, which compares with a figure of 25.5% last year.
But the so-called new pay practices now said to be flourishing in the USA — those that link rewards to team performance and the acquisition of skills and competencies — have yet to be widely adopted in the UK:
Pay for competencies (14.2%) is not yet a major feature of the UK reward landscape, but 23% of organisations are considering its adoption in the future.
Only 4.4% of organisations use team-based pay, with a further 7.5% considering this approach.
Gainsharing - a formula-based bonus plan - remains at the margins of current mainstream reward practice in the UK, ranked thirteenth in terms of usage.
Want to know more?
Title: Pay prospects for 2000 — a survey of the private sector , Pay and Benefits Bulletin 483, November 1999.
Availability: Industrial Relations Services, tel: 020 7354 5858.
Want to know more? The IRS web site is at www.irseclipse.co.uk