Extract from IDS Executive Compensation Review 320

Performance pay at Cheshire Building Society

To remain competitive all organisations need to modernise their pay systems from time to time and Cheshire Building Society is no exception. This year’s salary review at the society was the first to be conducted using newly introduced pay and performance arrangements, and Cheshire’s reward manager talked to us about the changes. This article provides detail on how Cheshire has developed a stronger link between pay and performance through creating a new broad-banded pay and benefits structure which is gauged against various factors including company and individual performance.

Alterations have also been made to pay range progression which is now tied to position in range, performance and affordability, with performance measured against five ratings. The decision making approach to performance ratings has also been changed with the introduction of peer review groups which allow greater fairness in the allocation of performance ratings. Detail is also provided on a new bonus scheme and improved benefits, with tables providing data on the performance pay matrix and the bonus pool distribution criteria.