Almost half of companies say company performance is the most important factor when setting basic pay increases – up from 42% last year – according to consultants Watson Wyatt.
Individual performance is now considered less important, as only a fifth of the 100 leading UK companies surveyed ranked it as the most important factor, compared with almost a third in 2002.
The firm’s 2003 Salary Budget Survey Report also shows that fewer companies are rewarding team performance – only 1% of companies rated it most important, compared with 6% in 2002.
Nick Shasha, a consultant at Watson Wyatt, said the majority of companies use a mix of market data, company performance, team performance, individual performance and cost of living factors when determining basic pay increases.
“The trend this year towards company performance has largely been driven by the tight financial constraints under which many companies are operating. Companies wishing to reward individuals or teams are increasingly likely to do so via incentive pay rather than through basic pay increases,” he commented.
