Member Article

'Death' of the traditional annual pay rise

Almost half of organisations no longer award employees an annual pay rise or cost of living adjustment, according to new research. Manufacturing, production and private sector service firms are the least likely to provide such a pay rise, says the report from the Chartered Institute of Personnel and Development (CIPD).

The current trend is to allocate pay budgets to departmental heads to distribute among staff based on individual or collective contribution, rather than as an ‘across the board’ rise. The CIPD research also shows that only one third of employers are confident in their line manger’s ability to deliver the appropriate pay messages.

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.”

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.

Cotton said: “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.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .