Human resource management practice I also available by michael armstrong

FIgure 

27.2

 

A pay matrix

Percentage pay increase according to performance rating  

and position in pay range (compa-ratio)

Rating

Position in pay range

 

80%–90%

91%–100%

101%–110%

111%–120%

Excellent

12%

10%

8%

6%

Very effective

10%

8%

6%

4%

Effective

6%

4%

3%

0

Developing

4%

3%

0

0

Ineligible

0

0

0

0 

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Part 

6

  Performance and Reward

386

The council attributes success in its reward policies to a 

strong and united political direction from the top; a long-

term  consistency  of  purpose,  but  with  the  appropriate 

phasing of changes and with adaptation to local circum-

stances; and a high involvement approach.

Guidelines to managers on 

conducting individual pay reviews

Guidelines have to be issued to managers on how 

they  should  conduct  reviews.  The  guidelines  will 

stipulate that they must keep within their budgets 

and may indicate the maximum and minimum in-

creases that can be awarded, with an indication of 

how awards could be distributed. For example, in 

happy days when the budget is 4 per cent overall, it 

might be suggested that a 3 per cent increase should 

be given to the majority of staff and the others given 

higher or lower increases as long as the total per-

centage  increase  does  not  exceed  the  budget. 

Managers  in  some  companies  are  instructed  that 

they must follow a forced pattern of distribution 

(a forced choice system), but only 8 per cent of the 

respondents  to  the  CIPD  survey  (Armstrong  and 

Baron, 2004) used this method.

Steps required

The  steps  required  to  conduct  an  individual  pay 

review are:

 

●

Agree the budget.

 

●

Prepare and issue guidelines on the size, 

range and distribution of awards and on 

methods of conducting the review.

 

●

Provide advice and support.

 

●

Review proposals against budget and 

guidelines and agree modifications to them  

if necessary.

 

●

Summarize and cost proposals and obtain 

approval.

 

●

Update the payroll.

 

●

Inform employees.

Case studIes

Kent County Council: successful reward

McDonald’s: demonstrating reward effectiveness

McDonald’s is a company with a strong culture of measure-

ment  and  has  built  its  own  people-profit  chain  method -

ology to produce impressive evidence that demonstrates 

how  rewards  can  enhance  employee  engagement  and 

thereby business performance. The operational and cost 

focus in the business means that reward arrangements are 

reviewed regularly and changed if they are not found to be 

delivering. But the subtler processes of consultation and 

change management are equally vital in maintaining and 

strengthening reward effectiveness.

The NSPCC: approaches to achieving reward effectiveness

The experience of the NSPCC was that while measures 

of organizational and reward effectiveness may differ, the 

delivery of them is every bit as critical, if not more so, in 

voluntary organizations. It also shows that limited resour-

ces need not be a barrier to assessing and demonstrating 

effectiveness. Establishing links to the core purpose of the 

organization  was  the  major  driver  behind  the  extensive 

research undertaken into effectiveness. The culture of the 

organization and its values were important considerations, 

as  was  ensuring  that  the  values  of  the  people  in  the  or-

ganization were aligned to them.

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