Merit pay most commonly used reward tool

REWARD MANAGEMENT

Merit pay most commonly used reward tool

Merit pay remains the most frequently used contingent pay practice, according to a survey by pay analysts IRS.

The proportion of survey respondents using this approach now stands at 65.1%, marginally down on last year's figure of 68.7%. The use of market-linked pay -- described by IRS as the "linking of pay to local or national market rates for similar roles" -- is the second most popular pay tool, used by 50.4% of survey respondents.

Other key survey results

• Cash bonuses -- there was a significant decrease in the use of cash bonuses, dropping to 48.4% of respondents from 57.9% a year ago.
• Voluntary benefits -- where employers gives their staff the opportunity to purchase a selection of their own or other companies' goods and services at a discounted rate -- are now used by 21.4% of survey respondents, up from 17.8%.
• Employee share schemes -- now operated by 25.8% of survey organisations, which compares with only 31.6% in the 2004 survey.

Want to know more?

Title: "Pay prospects", IRS Employment Review 835/Pay and Benefits, 18 November 2005.

Methodology: Data was gathered by a postal questionnaire mailed to IRS subscribers and non-subscribers in September 2005.

Survey sample: The survey is based on information received from 252 private sector organisations in the UK employing 660,000 employees.

Availability: To purchase this report contact the subscriptions department at IRS in London, tel: 020 8686 9141 or visit www.irsemploymentreview.com

Posted 6 January 2006