Reward management: focus on pay
This fourteenth annual survey of UK reward management is based on comprehensive responses received from 715 organisations, across private, public and third sectors. The main aim of the research is to provide readers with a benchmarking and information resource in respect of current and emerging practice in UK reward management. The following provides a summary of some of the key findings from the survey.
Base and variable pay policies
- Over 40% of all employers responding use individual arrangements such as spot salaries to manage base pay. Narrow grades and pay spines remain common pay structures, and innovation such as broadbanding seems relatively modest at 25%.
- Market rates, whether or not underpinned by job evaluation, are considered the most important factor in determining base pay levels, cited by 70% of survey respondents. Ability to pay is cited by 35% of employers.
- The most common criteria to manage individual base pay progression are individual performance, competencies, skills and retaining potential. By contrast, ‘seniority’ or length of service is cited by around a quarter of employers – a similar level to the outcome negotiated with a union or works council.
- Almost as many employers claim they operate performancerelated reward schemes (48%) as those saying they do not (52%).
- Individual bonuses and merit pay rises are the most common individual performance-related reward schemes among organisations offering such schemes, while the most common group performance-related schemes are profit-sharing and gain-sharing (bonuses based on improvements in production costs or productivity). There remains a clear private/public sector distinction in UK reward management architecture, with individualised spot salaries more commonly applied by private sector employers, and length of service-related pay spines typically used by the public sector.
Transparency and equality
- In respect of total cash earnings and how organisations position themselves within their sector, two-thirds who declare awareness of it believe they sit at or close to the median.
- While the finding is not markedly different compared with previous years, there is slight movement in the number perceiving themselves at the top or bottom of the market range, in favour of higher-level positioning, consistent perhaps with an antiausterity turn, as our expert practitioners panel speculated when presented with the data.
- Only half the organisations responding to the survey collect pay dispersion data (that is, data on the spread or range of pay across the workforce) in comparison with competitors.
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