Establishing the right reward system

Most organisations review pay yearly, with almost half all employers using individual arrangements or spot salaries to manage base pay. Other forms of base pay structures include narrow-graded pay grades, pay spines and broad-banded pay structures (see next page).

The most common criteria to manage individual base pay progression are individual performance (used by around seven in ten organisations), followed by competencies (just over two-thirds) and market rates (just under two-thirds). The least common criterion for pay progression is length of service.

The choice of reward system and structure sends powerful messages to employees about how they are valued and the behaviour the organisation is trying to stimulate.