|
|
|
|
![]() |
![]() |
 CIPD PRESS RELEASE Friday, 25 January 2008
CIPD research reveals death of the traditional annual pay rise
Almost half of organisations (46%) no longer
award employees an across the board annual pay
rise or cost of living adjustment, according
to this year's Annual Reward Management survey
from the Chartered Institute of Personnel and
Development (CIPD). Manufacturing, production
and private sector service firms are the least
likely to provide such a pay rise.
The current trend is to allocate pay budgets
to departmental heads to distribute among staff
based on individual and or collective
contribution, and movements in market rates
and inflation, rather than as an across the
board rise.
Charles Cotton, CIPD's Employment Conditions
and Reward Adviser said: "The decline in the
yearly traditional pay rise seems to be
spreading throughout employment sectors. Gordon
Brown for example has announced new plans to
abandon annual pay negotiations in favour of a
three yearly settlement for public sector
workers.
"Changes to pay and reward packages can often
leave employees confused, demotivated and in
the dark about what they need to do to achieve
reward and recognition. Line managers can play
a key role in delivering messages around pay,
but they need to be coached and developed on
how to communicate messages around pay increases
and benefits more effectively."
It's not only the traditional across the board
pay rise that is on the wane in the private
sector, but also the final salary pension scheme,
with only one fifth of organisations keeping
them open to all employees. Specifically within
the manufacturing and production sector, 50%
of firms have closed their pension schemes to
new entrants, expected to increase to 68% this
year. The survey detects an increasing number
of employers putting more money into defined
contribution pension arrangements, reflecting
a concern that going forward employees may not
receive a decent pension.
The environment has also become a major concern
to organisations with over three fifths (62%)
of employers having reviewed reward policies
to ensure it supports environmental strategy.
The most significant driver given for carrying
out these reviews is to enhance and protect
their organisation's reputation.
Cotton adds: "The shift in pay practices from
those that solely reward financial achievements
to those that recognise environmental goals
suggests an increasing concern with employer
branding. Attempts to align the environmental
practices with the employer and product brands
can make it easier to attract, retain and
motivate talent as well as retain and attract
new customers and clients in an increasingly
competitive market.
"How you reward and recognise employees sends
a powerful message to employees at all grades
about what your organisation regards as
important. If you claim a green philosophy
then this should be reflected in your reward
principles, strategy, policies and practices."
Other key findings
* 70% of organisations use cash based bonuses
or incentive plans. Broken down by sector 86%
of organisations in the manufacturing and
production sector, 89% in private sector
services and 30% of voluntary and public
sector services provide cash based bonuses.
* Only 40% of employers plan to amend their
current bonus scheme or introduce new schemes.
* Over one third of employers operate both recognition
and non-cash incentive schemes. Private sector and
larger employers are much more likely to operate such
plans.
* 75% of employers use a combination of factors such
as individual performance, market rates and team
performance to determine an employees pay progression.
* 1% of employers use video/DVD, blogs or podcasts
to communicate pay messages
* 82% of private sector organisations use meetings
with line managers to communicate pay messages
* 88 % of public sector organisations communicate
pay messages through HR
These findings will be discussed on February 6 2008,
at the CIPD's Annual Reward Conference 2007, in
Olympia. Speakers at the conference include:
David Smith, Economics Editor, The Sunday Times on
Current and Future Trends in Reward
John Marsden, Human Resources Director, Honda
Racing F1 team on Rewarding Talent
David Wightman, Head of Group Compensation and
Benefits , Heineken and Janet Fleming, Head of
Workforce Hub for the Third Sector, NCVO on the
Benefits of Non- Financial Reward
Adrian Furnham, professor of Psychology,
University College London on the Psychology
Behind Reward
Notes to editors
* For a press pass please or an advanced copy of
the Annual Reward survey, please contact: Anna
Wallace on 020 8616 6399/ mailto:press@cipd.co.uk
* The CIPD Annual Reward Conference 2008 will
take place at Olympia, on the 5-7 February 2008.
For more information about the Reward conference
visit http://www.cipd.co.uk/rewardconference
* The Chartered Institute of Personnel and
Development (CIPD) has over 130,000 members
and is the leading professional institute for
those involved in the management and development
of people
Press enquiries:
Gregor Ridley/Meera Vohora/ Hannah Smith/Anna Wallace
Tel: 020 8612 6400/07736 273458
mailto:press@cipd.co.uk
|
![]() |
 |
|
|
