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| Message From: madure |
Total Posts: 261 |
Rank: Thinker |
| Post Date: 14/06/2006 07:11:22 |
Points: 1355 |
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Summary of key findings from 2006 CIPD-Lond, Survey on Reward Management
The fifth annual survey of UK reward management is based on responses received from
535 organisations, across all industrial sectors, employing around 1.4 million employees.
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Base pay
• Overall, the most common approach to managing base pay is to use individual pay rates/ranges/spot rates and broadbands; for salary levels, market rates and job evaluation are used; pay progression is managed with reference to individual performance
and competency; and the most common approach to the annual pay increase, uses organisational performance and the rate of inflation.
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Just under two-fifths of organisations with bonus or incentive arrangements will be changing them this year. The most common approach is to bring in a new scheme followed by increasing the targets and maximum awards payable for existing schemes,
mostly to enhance business performance.
• The most popular ways of linking organisational salaries to market rates is to use pay surveys and job adverts, typically aiming for the median level. Total cash for higher-grade staff is more likely to be pitched at the upper quartile.
Pensions and other benefits
• In the private sector, pay progression is usually to • Just under one-fifth of employers will be amending a target rate in the mid-point of a range, while in their existing pension arrangements in 2006. The most popular approach is to make the existing defined-benefit (DB) plan more affordable (such as reducing the level of benefits or changing
the rules allowing staff to retire early on a non- actuarially reduced pension); the next most popular approaches are to increase both the employer and employee contributions in an attempt to reduce the pension deficit. The main driver for change is the
desire to reduce future risk.
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Many reward professionals plan to amend their organisations’ existing benefit arrangements in 2006. More employers are introducing or enhancing their
existing benefit provision than are reducing it. The benefits most likely to be introduced in 2006 are childcare vouchers, home computers and bicycles – all government-inspired tax-efficient initiatives.
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As a percentage of the pay bill, the median cost of providing pensions and other benefits is 15%, with the inter-quartile range being between 10% and 24%. Eighty-five per cent of respondents expect their benefit spend to either stay the same or increase in 2006.
Front-line management and reward
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Our research indicates that front-line managers are not given much discretion in making total reward decisions, nor are they awarded much responsibility for communicating the business rationale behind the organisation’s total reward decisions.
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This is perhaps not too surprising as most respondents do not rate highly either the reward decision-making or communication skills of their front-line managers. The majority of our sample don’t believe that their front-line managers received adequate training to allow them to be effective in making reward decisions or communicating on
reward issues.
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While many employers claim to link an element of managers’ reward to the achievement of HR as well as business targets, most of the targets are measurable business ones.
Reward strategies
Our survey reveals that 35% of employers claim to have a written reward strategy, though it shows that there are variations by sector and size.
The larger the organisation, the more likely it is to have a reward strategy. Due to national pay bargaining, public service employers are less likely to have a reward
strategy than other organisations.
Why are so many employers not adopting a strategic approach to reward? One possible explanation is that there is no business strategy to align to, or, if there is one, it’s so weak it’s not worth aligning a reward strategy to it. However, virtually all of our respondents
claim to have an articulated business strategy, and on a scale of one to four (where four is ‘our business strategy fully meets the needs of the organisation’ and one is ‘our business strategy doesn’t meet the needs of the organisation’) they typically rate their organisation’s business strategy highly .
Another explanation is that there isn’t an HR strategy to align to. However it shows that almost two-thirds of our sample have an HR strategy (interestingly, public service employers are more likely to have one).
One possible explanation for the low take-up of reward strategies is that reward is covered within the overall people management and development strategy.
Another is that the strategy is pursued but not specifically written down. A further explanation is that effectively operating a reward strategy is hard work.
Prof.Lakshman Madurasinghe MA.,MS(Psy).,PhD is a Chartered Fellow CIPD-Lond ,and a Consultant Psychologist/ Attorney
We site: http://lmadurasinghe.googlepages.com
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