Reward professionals keen to link pay with performance, finds CIPD survey

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The findings from this year’s annual Reward Survey from the Chartered Institute of Personnel and Development (CIPD), launched this week at the annual Reward Conference, reveal an optimistic outlook for the economy and expectations of growth in 2010. Results from the survey of almost 800 reward professionals show that the majority of respondents anticipate spending less time cutting costs than they did in 2009. Instead, this year’s top reward priorities will be ensuring reward is aligned with the business strategy (52%) and that reward packages are market competitive (51%). While cost minimisation is still one of the key priorities, it has slipped to being as equal a priority as ensuring reward is internally fair (44%).

Along with changing priorities for 2010, over half of those surveyed (53%) also predict that salary spend is going to increase this year, with only 15% saying it will decrease and over a fifth (21%) saying that it will stay the same as 2009. The breakdown of sectors reveals that public sector employers are more likely to predict a decrease in their salary pay bill (18%) compared with the private service sector (13%) and manufacturing and production sector (16%). However, over half (51%) of the respondents from the public sector are still expecting an increase this year. In the private service sector 56% expect a rise and 52% in the manufacturing and production sector.

The survey also reveals that employers intend to better reward those employees who contribute most to the organisation. This is particularly true in the private sector services and in manufacturing and production, where employers are most likely to direct a greater percentage of the overall pay pool to their top talent. One in five (22%) private service sector firms and 17% of manufacturing and production companies also intend to increase bonus payments between ‘normal’ and ‘high-performing’ staff.

Charles Cotton, Reward Adviser, CIPD says: “The survey results show a distinct shift in the approach to reward. Employers seem more confident about the economic outlook in the months ahead and have refocused their thinking with that in mind. Many will be going back to the drawing board to revisit their reward strategies in the wake of the recession and may be keen to link pay more with performance. The rise in the number of employers increasing the pay award differentiation confirms that employers want to ensure that whatever profits they reap in 2010, a better proportion should go to those who have added the most value.”

Other findings reveal that there has been a sharp rise in the number of employers operating recognition and non-cash incentive schemes. Four in ten employers (41%) now have recognition schemes such as employee of the month, this is up from 31% last year. The number using non-cash incentive schemes has also jumped from 17% to 30% this year.

Charles Cotton continues: “It’s not surprising that these non-cash schemes have gained popularity last year when many employers had limited resources to reward staff. Most will be reviewing their non-cash incentive and recognition arrangements in 2010 and it will be interesting to see if these fall by the wayside when the economy picks up.”



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