PAYING FOR PERFORMANCE
Take-up of competency-related pay remains low
Forging a link between competencies and reward has taken off much more slowly than had been expected, with only a quarter of employers that have introduced competency frameworks tying them to reward, according to new research by Industrial Relations Services.
The eighth in the annual series of benchmarking studies conducted by the IRS journal Competency & Emotional Intelligence estimates that 3.2 million employees in Britain are now covered by the competency frameworks of around 1,500 organisations.
No other fresh approach to the management of people has emerged in the past decade that has succeeded in embedding itself so firmly in mainstream personnel management practice, says Neil Rankin, the author of the report.
Main uses of competency frameworks
At present, employers use competencies for several personnel processes:
Over eight in 10 employers that have introduced competency frameworks use them as the basis for training and development processes, appraisal or performance management, and personal-development or career-planning systems.
Just over three-quarters also take account of competencies in recruitment and selection.
A quarter of these organisations have competency-related pay.
Introducing competency-related pay is not all plain sailing
What explains this reluctance to forge what many see as the final link in the chain of practices based on competencies: relating them to reward? For IRS, the answers is straightforward:
The relatively low usage of competency-related reward among organisations with established competency frameworks is an indication of both the difficulties that have to be overcome in making such a link and the controversial nature of this approach.
What's more, the low usage of competency-related pay has created a vicious circle . As Rankin points out:
There are few role models for other organisations to examine and evaluate. And the lack of a critical mass means that no single best way of linking pay to competencies has so far emerged. This reduces the visibility of competency-related pay and presents yet another obstacle to its adoption, as employers have to choose between a bewildering array of competing methods.
Current uses of competencies (among employers with competency frameworks)
|
| All employers | Manufacturing | Private sector services | Public sector |
| Training and development | 87% | 90% | 88% | 83% |
| Appraisal/performance management | 82% | 86% | 86% | 76% |
| Personal development/personal career planning | 82% | 76% | 88% | 81% |
| Recruitment and selection | 77% | 83% | 67% | 83% |
| Job/role design | 51% | 55% | 50% | 49% |
| Change management/cultural change | 39% | 41% | 41% | 37% |
| Grading/job evaluation | 33% | 45% | 29% | 29% |
| Teambuilding/working | 31% | 38% | 33% | 24% |
| Succession planning | 26% | 35% | 26% | 20% |
| Pay/bonuses | 24% | 28% | 29% | 17% |
| Sample sizes | 113 | 29 | 43 | 41 |
Source: Industrial Relations Services.
Want to know more?
Title: Raising performance through people: the eighth competency survey , by Neil Rankin, Competency & Emotional Intelligence Benchmarking report, 2001.
Methodology: The research is based on three sources:
a survey of 113 employers, conducted by IRS in September and October 2000
in-depth interviews with participating employers
an analysis of competency documentation supplied by participating employers.
Sample size: Based on research into 156 employers’ practices, of which 113 are current users of competencies and a further 30 are planning their introduction. The information concerning employers that have already introduced competencies relates to a combined workforce of three-quarters of a million people.
Business sectors: Both private sector services and the public sector make up just over a third each of the organisations studied (38% and 36%, respectively), while manufacturing industry comprises the remainder (26%).
Availability: contact Industrial Relations Services, 18— 20 Highbury Place, London, N5 1QP, tel: 020 7354 6747, email: publications@irseclipse.co.uk
Web site: To find out more about IRS, jump to www.irseclipse.co.uk