CIPD research: More than half of employers want to align reward with business strategy

More than half of employers (59%) want to ensure that their reward package is closely aligned with the organisation’s business strategy, according to the Chartered Institute of Personnel and Development (CIPD).

The CIPD’s Reward Management Survey 2011, produced in partnership with Benefex, also showed that employers wanted to make sure reward is: market-competitive (41%); aligned with pay with individual employee and business performance (40%); internally fair (35%); and minimise costs (33%).

In terms of pensions and benefits, nearly every respondent organisation offers a contributory pension scheme to its employees (99%).

More than two-thirds (69%) of pensions offered are defined contribution (DC) schemes; just over a quarter (25%) are defined benefit (DB) schemes. The majority of DB schemes are now closed or in wind-up.

Four out of ten employers are intending to make changes to their pension arrangements within the next year. The most common intended changes are to introduce salary sacrifice and to increase employee DB contributions. An eighth of employers are intending to close their DB schemes to new entrants.

Six out of ten private sector employers are not expecting the requirement to auto-enrol employees into pensions to impact on the value of their current pension offering.

Most respondents feel the government is responsible for educating and communicating with employees about 2012 pension reforms.

Just over half the respondents said that their response to the end of the default retirement age will be to allow employees to work as long as they are able so they have the opportunity to build up their savings for retirement.

Four out of ten respondents think it is too early to say what their response will be, while one-quarter say they will improve their performance management system.

Matt Waller, chief executive officer of Benefex, said: “With the backdrop of longer working lives and the need for employees to build up larger savings for retirement, it is not surprising to see so many employers now embracing the removal of the default retirement age and an acceptance that employees should be allowed to do the job as long as capable.”

In addition, eight out of ten employers offer flexible/homeworking as a benefit to employees, while nearly half of employers (47%) offer voluntary affinity benefits and just over a third (36%) offer a flexible benefits scheme.

Meanwhile, 67% of employers operate a bonus or incentive scheme. The types of arrangements offered are: merit pay rises (56%); individual bonuses (54%); individual non-monetary recognition awards (29%);combination schemes (28%); and sales commission (20%).

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