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Pay awards are based on personalities

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According to nationwide survey respondents, pay awards are based more on the employee/manager relationship than on ability. The latest report on reward by the CIPD and the Reward Group, “Views on Pay Management”, aimed to find out how fair personnel professionals considered pay within their organisations. It is based on interviews with 1,300 CIPD members and other personnel professionals. The findings also reveal a perception among respondents that those in higher status jobs are more likely to be overpaid.

John Philpott, the CIPD’s Chief Economist said: “There is a perception that pay structure and awards are somewhat unfair in UK organisations. A lack of transparency may be a key factor in this given that respondents were more likely to feel that their organisations are secretive about pay. Our view is that organisations need to be more effective in communicating information about pay and how it is determined. Communication should be ongoing, regular and not just when people join the organisation”.

It hasn’t been a good week for the image of reward packages. The CIPD’s Reward Management Survey showed a similar level of discontent.

Main findings

The proportion of respondents who felt that various occupational groups were overpaid increased in relation to seniority of those groups. Over 26% felt that their Director or CEO was overpaid, compared with 8% for middle and line management and 6% for non-manual non-management.

The overall perception that pay awards were unfair led the majority of respondents to believe that it had a negative effect on recruitment (59%); retention (73%) and employee commitment (78%).

41% said that their organisations were secretive about pay decisions compared with 33% who said that they were open.

13% of respondents said that their organisations did not care about the fairness of pay decisions.

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