HR Industry News

No pay rise? You're not alone, says the CIPD

— 25 January 2008 —

Employees are being left “in the dark” over the disappearance of traditional across-the-board pay rises, according to the CIPD.

A study of over 600 organisations in both the public and the private sector reveals that budgets are being allocated to departmental heads for distribution, as opposed to a wholesale annual pay increase or cost of living adjustment.

The CIPD have claimed that workers are being left “confused, demotivated and in the dark”, wondering what they have to do to achieve recognition.

Charles Cotton, the Employment and Reward Adviser at the CIPD, said: “The decline in the yearly traditional pay rise seems to be spreading throughout employment sectors. 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.”

The final salary pension scheme is also on the wane, with just 20% of organisations keeping them open to all employees. Cotton continued:

“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.”

Ceridian's Head of Reward and HR Information, Michael Newstead, added, “the move away from annual ‘across the board increases’ is not new. For many years a number of companies considered to be leaders in Human Capital Management have been allocating pay budgets to managers. Those companies have recognised the benefit to the business of creating a meritocracy and paying for performance. Of course the process works effectively when linked to a well-run, structured Performance Management Process which operates as part of a fully-integrated HR Information Management System. Information is the key to monitoring and understanding an employees performance and contribution to the business and rewarding that contribution.

“The companies that operate as above are also usually the same companies that will have taken the time and trouble to communicate to their staff the company pay policy and will have developed a per for performance culture at all levels in the business.”

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