Understanding reward

This series of reward articles in IDS Pay Report is aimed at those who want reward issues explained clearly, with practical real-life examples. They draw on the wide experience IDS has gained from talking to organisations about their changes to pay structures and systems and are written to be easily understandable to the lay reader.

• Staged and deferred pay deals
  We take a look at some of the reasons for staging or deferring pay deals. Apart from reducing overall paybill costs, these include spreading the cost of higher deals, adding stages which are conditional on achieving targets or providing extra incentives to employees. IDS Pay Report 993, January 2008
• A guide to labour market statistics on employment and unemployment
  At IDS we regularly make use of official statistics on the labour market and in the first part of this article we explain more about the data, how it is complied and its uses. We also explain why IDS continues to view the UK labour market as strong against opposing views that it is weakening. IDS Pay Report 983, August 2007
• Measuring the cost-of-living and inflation
  Most pay reviews use the cost-of-living as a central reference point. Measuring the cost-of-living over a 12-month period is crucial because it is the amount by which a salary agreed a year ago has been devalued by rising prices. There are three main measures of increases in the cost-of-living, namely the Retail Prices Index (RPI), the Retail Prices Index excluding mortgage interest payments (RPIX) and the Consumer Prices Index (CPI). While the RPI is most relevant to pay negotiations and is the main measure used by negotiators, the CPI is used by the Government as a macroeconomic target. This article seeks to clarify the different measures of inflation, how they are calculated and their uses for pay negotiations and economic policy. IDS Pay Report 974, April 2007
• Towards a modern definition of 'pay drift'
  The IDS Pay Report team recently completed a research project to provide a modern definition of 'pay drift'. As part of the project we looked back to the origin of the term in the 1960s and examined its usage since by economists and pay specialists to see if we could produce a modern definition. This synopsis of our research brings clarity to an imprecise area of knowledge on pay systems. IDS Pay Report 970, February 2007-02-02
• Pay review bodies
  For certain groups of public sector employees, pay is set by independent pay review bodies. In this article we examine the changing function of this 35-year old system of pay determination, and look at the tension between their independent role and Government policy on public sector pay.
  IDS Pay Report 957, July 2006
• ACAS
  In January 2006 the Advisory, Conciliation and Arbitration Service (ACAS) celebrated its 30th anniversary. Born out of a period of industrial strife, this independent, tripartite organisation was set up as a statutory body on 1 January 1976 with the aim of providing a mechanism for dispute resolution and bringing about more peaceful industrial relations. We look at the make-up of the organisation and investigate how its role has adapted to suit the changing industrial relations climate over the past 30 years.
  IDS Pay Report 950, April 2006
• Pay progression
  Many employers have moved away from one-dimensional approaches to pay progression towards more complex schemes involving two or more measures, prompted by tight labour markets and concerns around transparency. We look at recent trends in progression systems, highlighting the various forces behind the changes employers are making and evaluating the pros and cons of the different approaches.
  IDS Pay Report 945, January 2006
• Salary sacrifice
  The use of salary sacrifice schemes has been on the increase since the introduction from April 2005 of tax exemption for employer supported childcare. The new rules mean that employers have been able to provide childcare vouchers to employees free of tax and NI, up to £50 a week. Similar initiatives already exist for the lease of personal computers and cycles under the Home Computer Initiative and the Cycle-to-Work scheme. We explain how salary sacrifice schemes work and how employers are using them as part of their reward strategy.
  IDS Pay Report 942, December 2005
• Job evaluation
  Interest in job evaluation has been rejuvenated in recent years and has been a key element in pay modernisation in the public sector and in pay restructuring among private companies. We look at different job evaluation approaches and the reasons for undertaking a job evaluation exercise.
  IDS Pay Report 936, September 2005
• Bonus schemes
  Bonus schemes, a form of variable pay, are widely used in many sectors of the economy. They are a new feature of civil service pay. The objectives and design of bonus schemes vary according to the policy of the organisation using them. Their popularity may also be governed by external factors such as government fiscal policy. Our feature looks at the rudiments of bonus schemes and provides an overview of those commonly in use.
  IDS Pay Report 933, July 2005
• Gender pay differences
  The main measure for the gender pay gap is through comparing the average (mean) hourly pay for men and women, excluding overtime. The Annual Survey of Hours and Earnings (ASHE) published in October 2004 showed that for the whole economy the gender pay gap for full-time employees was 18.4 per cent. This article analyses the difference in the pattern of earnings distribution for women and men that lies behind the overall gender pay gap figures.
  IDS Pay Report 932, July 2005
• Annual hours systems
  Annual hours allows working time to be matched more closely with the demand for labour and provide stable income levels for employees as the reliance on overtime is often removed. We look at how these systems are often used as part of a larger change process within a company.
  IDS Pay Report 928, May 2005
• Pay for overtime
  We look at the issues surrounding overtime working and how it is rewarded.
  IDS Pay Report 927, April 2005
• Voluntary benefits
  Voluntary benefits are an increasingly popular addition to the overall reward package offered to employees. This feature looks at what voluntary benefits entail and the advantages for employers in introducing these schemes.
  IDS Pay Report 925, March 2005
• Industry pay agreements
  National industry agreements are still an important influence in pay bargaining. This article examines the purpose, influence and benefits of industry joint bargaining in 2005.
  IDS Pay Report 923, February 2005
• Flexible benefits
  Flexible benefits are often referred to as ‘cafeteria benefits’, with a menu for employees to choose from. Our feature looks at the advantages and disadvantages associated with such schemes.
  IDS Pay Report 920, January 2005
• Market rates and pay benchmarking
  Employers are increasingly seeking to reform their pay structures with a new emphasis on market rates. This begs the question of how do we know what is the market rate for a job. We give an overview of the different methods and sources of benchmarking data.
  IDS Pay Report 919, December 2004
• Measures of inflation
  Most pay reviews have the cost of living as a central reference point. The rise in the cost of living over a twelve-month period is the amount by which a salary agreed a year ago has been devalued by rising prices. But what index should be used to measure changes in prices, and how are the various indices constructed?
  IDS Pay Report 917, November 2004
• The evolution of performance-related pay
  We examine the factors influencing the evolution of performance-related pay, under the influence of low inflation and increased use of market benchmarking, with the shift away from consolidated payments towards non-consolidated bonuses.
  IDS Pay Report 915, October 2004
• Age-related pay
  This article looks at the practice of varying pay according to the age of employees. It considers the long-term trends and at some of the political, cultural and legal influences on this. It also examines the revival of age differentiation in the wake of the National Minimum Wage.
  IDS Pay Report 912, September 2004
• Competency-based pay
  We look at how competency-based pay has been said to have failed to live up to its early promise in improving employee performance and the practical difficulties in linking such frameworks to pay.
  IDS Pay Report 909, July 2004
• Equal-pay reviews
  We examine the process of carrying out an equal pay review and look at a number of companies and organisations which have conducted reviews and summarise their findings.
  IDS Pay Report 908, July 2004
• Market-related pay
  We consider the pros and cons of market-related pay and look at the greater use of benchmarking by employers as market forces exert more influence on pay levels.
  IDS Pay Report 907, June 2004
• Broad banding
  We discuss the pros and cons of broad-banded pay structures and examine why employers have started to move away from broad bands by reintroducing spot points or mini scales.
  IDS Pay Report 906, June 2004
• Long-term pay agreements
  We examine the benefits and pitfalls surrounding long-term deals, the pay objectives of such settlements and how different organisations set the future increases in multi-year agreements.
  IDS Pay Report 905, May 2004
• Zonal pay systems
  Zonal pay systems allow employers to deal with variations in the cost-of-living and recruitment and retention pressures in a more flexible, targeted way.
  IDS Pay Report 904, May 2004
• Harmonisation and single status
  Many organisations are moving beyond the traditional status distinctions between ‘manual’ and ‘white-collar’ employees.
  IDS Pay Report 903, April 2004
• Job families
  In the second of our new series of articles on understanding reward, we look at job family pay structures. We outline the reasons companies introduce them, how they operate in practice and at some of the problems associated with them.
  IDS Pay Report 902, April 2004
• What is ‘total reward’?
  What is meant by ‘total reward’ and what some employers are doing to become an ‘employer of choice’.
  IDS Pay Report 901, March 2004