Take-up of competency pay continues to grow


Take-up of competency pay continues to grow

Employers' use of competencies has moved from the margins of personnel management to the mainstream. The surge of organisations taking up competencies continues unabated. That's the most obvious conclusion to emerge from the seventh annual competency survey by pay analysts Industrial Relations Services.

The 200-company survey finds that organisations tend to introduce competencies in one area of personnel work and then gradually extend them. Training and development is the human resource activity with the widest use of competencies (used by 88.2% of survey participants), followed by assessment/performance management (84.8%).

Pay connections

In terms of human resource processes, however, reward is still seen as the final frontier . As Neil Rankin, the author of the report, puts it: Of all the potential uses to which competencies can be put, reward and grading are the most contentious and complex.

Critics: For those who question the wisdom of relating reward and competencies, individuals are unlikely to honestly address their performance and identify their learning needs, if there is likely to be an adverse impact on pay. What's more, this remuneration tool is a recipe for pay drift.

Supporters: For its advocates, though, without the pay link the organisation's commitment to competencies will be seen as hollow and half-hearted. It makes little or no sense to recruit on competencies, assess performance and development on that basis, but then reward people on different criteria.

IRS survey results on pay, progression and grading

To see how competency-related pay works in practice, the survey investigated four different kinds of link between competencies and pay.

It found that:

  • just over four in 10 employers have created a link between annual pay rises for individuals and the acquisition and use of competencies

  • nearly half take account of competencies in progressing employees along their current pay grade or band

  • a similar proportion uses competencies in determining an individual's promotion or demotion to a higher or lower pay grade or band.

  • the least common form of linkage involves the use of competencies in the design of grading systems (where job evaluation is replaced or amplified by competencies).

Employer's use of competencies in pay and grading


Play important role

Play minor role

Planning to use

Not used

Individual annual pay rises





Progression within grade/band





Move to higher/lower grade/band





Design of grading system





Source: Industrial Relations Services.

The 48-page IRS report offers an unrivalled resource for those interested and involved in the use of competencies, providing a rich source of ideas, as well as valuable benchmarking data. Written by an editorial team with an impressive mastery of the subject, backed up by extensive practical experience, the study is supported by detailed research and in-depth interviews with senior managers in eight named organisations.

Survey details

Title: Performance through people: the seventh annual competency survey, 1999/2000.

Base date: postal questionnaire undertaken in September and October 1999.

Survey sample: information supplied by 196 employers — of which 89.7% are from the UK. The combined workforce of those companies that have already introduced competencies is 1.1 million, while organisations planning to introduce competencies employ a further 0.27 million.

Business sectors: private sector service firms make up 36.7% of the sample, while their manufacturing counterparts comprise 35.7%. The public sector accounts for 35.7% of the sample.

Availability: contact Graham Hanson, Industrial Relations Services, tel: 020 7354 6746.

Want to know more? Browse the IRS web site . . . www.irseclipse.co.uk