United Kingdom

Performance related pay - one of top priorities for reward departments

February 2015


Developing performance-related pay initiatives is one of the top priorities for reward professionals in 2015, new research has found.

According to XpertHR who surveyed over 170 UK organisations about their reward strategies and priorities, 50.6 per cent said ‘increasing the link’ between pay and performance will be a priority for their department during 2015 and 17.5 per cent said it was a top priority. Other organisations meanwhile were looking to introduce performance-related pay for the very first time.

Jeff Fox, Senior Consultant at Aon Employee Benefits said: “If employees understand how their performance (and that of the organisation as a whole) can influence pay, there is no doubt an organisation will see an improvement in productivity. However, there needs to be real clarity from the organisation on how the two link together and how an employee’s pay packet can be positively, and indeed negatively, affected by performance.”

The XpertHR research also indicated:

  • Several employers are planning to review their existing pension schemes and look into alternative providers
  • Some organisations are looking to align reward across the whole business
  • Others are considering extending or enhancing their existing reward packages
  • Specifically, 37.8 per cent of respondents said their benefits spend would increase during 2015 in order to remain competitive
  • Two-thirds of respondents also said they were reviewing current pay rates in line with their market position.

Commenting on the research, Sheila Attwood, pay and benefits editor at XpertHR said linking pay to performance was ‘one of the most important initiatives organisations will work on’ in 2015 although many HR departments were still adjusting to pensions auto-enrolment legislation.

Fox added: “Employers need to ask themselves, which objective measures will be used to measure performance? How will performance be measured? How will expectations be managed going forward? As with everything, communication will be absolutely key.”



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