REWARD MANAGEMENT
Two-thirds of UK private sector uses merit pay
Despite the bad press that merit pay has received in recent years, it is now the norm rather than the exception across a large swathe of the private sector, according to a survey by the Confederation of British Industry, the UK's main employers' organisation, and human resources consultancy William M Mercer.
The 829-company survey found that merit pay was the single most popular type of programme used to determine pay in the UK. As many as 64% of private sector employers operate formal assessments of individual performance to set pay, with arrangements based on company performance or profits in its wake at 43%.
Employers bundling reward practices
The research suggests that employers are simultaneously combining several different compensation techniques. Companies are using bundles of pay methods to reward desired individual or team performance or competencies.
As the authors of the report explain:
The survey supports signs that companies are moving to a suite of pay methods to make up their reward strategy, with 87% of respondents reporting using more than one reward method and 65% reporting using three or more reward methods.
How does your organisation determine levels of pay and benefits?
|
| Per cent of respondents |
| Formal assessment of individual performance | 64% |
| Direct link to company performance/profit | 43% |
| Informal assessment of individual performance | 40% |
| Broad link to company performance/profit | 33% |
| Skill-based pay | 32% |
| Incremental pay | 25% |
| Competency-related pay | 21% |
| Formal assessment of team performance | 19% |
| SAYE sharesave | 16% |
| Informal assessment of team performance | 14% |
| Other forms of financial participation | 13% |
Source: Confederation of British Industry/William M Mercer.
Survey details
Title: Employment trends survey 200: measuring flexibility in the labour market.
Survey sample: information supplied by 829 companies, covering two million employees. Nearly half of participants employed fewer than 200 employees and 7% had more than 5,000 employees.
Business sectors: manufacturing organisations represent 37% of respondents, with 53% in services.
Methodology: survey sent to 5,000 private sector employers in January 2000.
Availability: contact the publications department at the Confederation of British Industry in London, tel: 020 7395 8071.
Want to know more?
Browse the Confederation of British Industry web site . . . www.cbi.org.uk
Jump to William M Mercer's web site . . . www.wmmercer.com