49% offer performance-related reward

Charles Cotton

Less than half (49%) of respondents offered a performance-related reward, incentive or recognition scheme in 2014, according to research by the Chartered Institute of Personnel and Development (CIPD). 

Its annual Reward management survey, which surveyed 525 senior reward and HR practitioners across the public, private and voluntary sectors, found that this has fallen from 65% in 2012.

The research also found that just 28% of organisations positioned pay in the upper quartile or top 10% bracket in 2014, down from 35% in 2011.

Less than a fifth (17%) of those surveyed positioned pay in the lower quartile or bottom 10% of their sector, an increase on the 13% low recorded in 2012.

Further findings from the research include:

  • 37% of respondents in the manufacturing and production sectors position pay in the upper quartile or top 10%, followed by 30% of those in private sector services.
  • 17% of employers in the voluntary, community and not-for-profit sector position pay in the upper quartile or top 10% bracket, with 84% positioning it in the median, lower quartile or bottom 10%.
  • When it comes to determining pay, 78% cite an organisation’s ability to pay as the most important factor. Less than half (46%) say the going rate of pay rises elsewhere is the most important factor, with 45% citing changes in the market rate.
  • Nearly two-thirds (64%) of respondents use competencies as pay progression criteria, up from 50% in 2011.
  • 60% of respondents use skills to determine pay progression, compared to 44% in 2011.

Charles Cotton (pictured), performance and reward adviser at the CIPD, said: “With continuing economic growth and recovery of the labour market, we might have expected organisations to be aiming for competitive salaries to attract and retain employees.

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“However, this survey shows that so far this isn’t the case. Ongoing productivity challenges are one reason meaning that many employers simply can’t afford to increase salaries significantly across-the-board.

“On the other hand, where employers have enjoyed access to a steady supply of labour in the market, they simply haven’t been under pressure to raise starting salaries and, in turn, this has seen little movement across salary levels in general.”