Survey looks at contribution-related pay

CONTRIBUTION-RELATED PAY

Contribution-related or performance-related pay schemes are in widespread use across both the private and public sectors and most managers believe that they have a positive effect, according to new research by Incomes Data Services.

But IDS found little in the way of hard evidence of success and most organisations operating schemes of this type have not reviewed the effectiveness of their pay arrangements over the past 12 months.

Key survey findings

The report includes the results of a survey of more than 100 major employers in the private and public sectors. The results show:

nearly 70% of organisations surveyed operate contribution-related pay for at least part of their workforce
senior managers are the most likely to be covered and manual employees the least likely
contribution-related pay is most common in the finance sector and least used in the public and not-for-profit sector
nearly 60 of those organisations with schemes believe that they have positive rather than negative effects, though only about 1% give their schemes top marks for effectiveness, while a tenth rated their schemes as ineffective
just over half the organisations said they had not reviewed the effectiveness of their pay arrangements in the past 12 months.

A final word

"The majority of respondents to our poll gave a positive assessment of contribution-related pay, but it was two cheers rather than three. They recognise that schemes of this kind can go wrong, but there is a widespread belief among senior managers that the principle of such schemes is right. Hard evidence to back up that belief, however, is harder to find." -- Steve Tatton, editor of IDS Executive Compensation Review.

Want to know more?

Title: Paying for Contribution, Incomes Data Services.

Availability: Copies of the report are available at £149. To order your copy contact customer services at Incomes Data Services in London, tel: 020 7324 2599.

IDS is a leading UK information and research service on employment issues, providing a range of publications for employers, unions, government departments and other agencies. To find out more visit www.incomesdata.co.uk

Posted 3 May 2005