Two-thirds of UK employers use merit pay

REWARDING PERFORMANCE

Two-thirds of UK employers use merit pay

A survey by the London-based pay analysts Industrial Relations Services has found that 67% of the private sector companies polled are now employing an element of merit pay, up from just over half in 2000.

In the past year, two reward practices have declined in use -- all-employee share schemes and flexible benefits -- although IRS warns that the findings are not based on a matched sample.

In summary, IRS finds:

• Linking reward to the acquisition and use of skills has increased sharply, now used by more than a quarter of respondents, compared with last year's figure of just over one in ten.
• The incidence of pay for competencies increased this year to 23.6% of respondents, which compares with 17.4% a year ago. A further 7.5% of respondents plan to introduce competency-related pay in the coming 12 months.
• The popularity of broadbanding has "revived somewhat". Slightly more respondents (21.1%) are using this type of pay structure than a year ago (18.3%).

Reward practices in UK private sector organisations, 2003
	Using (per cent of respondents)	Considering (per cent of respondents)
Merit/individual performance pay	67.1%	7.5%
Market-linked pay	59.6%	3.2%
Stakeholder pensions	35.4%	1.1%
Incentive payments	32.9%	0.4%
Skills-based pay	27.9%	6.8%
Profit-sharing scheme	26.4%	2.1%
Competency-based pay	23.6%	7.5%
All-employee share schemes	21.1%	0.4%
Broadbanding	21.1%	3.9%
Unconsolidated lump-sum	20.7%	1.4%
Flexible benefits	7.9%	11.1%
Gainsharing	2.1%	1.1%

Source: Industrial Relations Services.

Want to know more?

Title: "Settlements to remain at 3%: 2003/04 pay prospects survey", IRS Employment Review 787/Pay and Benefits, 7 November 2003.

Methodology: The data was gathered by postal questionnaire mailed to IRS subscribers and non-subscribers during August 2003.

Sample size: The survey was based on the views of senior remuneration, industrial relations and personnel managers in 280 private sector companies in the UK.

Business sectors: More than half of respondents were in manufacturing and four in ten were in services. There was a particularly large response from general services (24.6% of participants), followed by retail and wholesale (13.9%).

Availability: Contact the subscriptions department at Industrial Relations Services, tel: 020 8662 2000, or email: customer.services@lexisnexis.co.uk.

To find our more about IRS Employment Review visit www.irsemploymentreview.com

Posted 21 November 2003