CIPD guide highlights the need for HR to manage the pay review process as a crucial business activity

12 Jan 2011 10:27 AM

Pay can often account for the largest part of organisational expenditure. Get it wrong and employers may find that they are operating at a loss, or that they find it difficult to recruit and retain the talent they need, but get it right and it can create value for the organisation. The latest Chartered Institute of Personnel and Development (CIPD) Guide, The Pay Review Process, raises awareness of the need to establish the pay review as a business process and offers insight on how to achieve this.

Previous research has not focused much on how pay decisions have been made and the consequences of this. Through highlighting good practice from 16 public, private and voluntary sector organisations, the guide aims to help reward and HR professionals review their existing pay processes, or establish new schemes.

The Pay Review Process explains how to align pay awards closely with the needs of the business and identifies ten central messages for organisations to adhere to, including the importance of effective planning and the gathering and interpreting of relevant data. It also encourages practitioners to keep processes as simple as possible, to use management tools to support decision making and to use previous reviews as a basis for improving current practice. It also recommends that roles and responsibilities need to be clearly defined early on, and gives tips on using the pay process as a positive vehicle for change, to help foster business success.

Commenting on the research, Charles Cotton, CIPD Adviser for Performance and Reward said: “Too often the annual pay review is seen as a tick-box HR process, rather than a vital business process impacting on organisational strategy, despite the huge sums of money usually involved.

“Get it wrong and it may send out mixed messages on what your organisation values in terms of employee behaviours, skills, attitudes and performances. On the upside, the employers we have spoken to have emphasised that getting it right can create value for the organisation by supporting the employer brand.”

The 16 employers interviewed for this research are: Boehringer Ingelheim; Citizens’ Advice Bureau; FirstGroup; Kent County Council; John Lewis Partnership; McDonalds; Moog; National Bank of Abu Dhabi; Oxfam; Royal Bank of Scotland; Sainsbury’s; Shell; Specsavers; Transport for London; TUI Travel; and Welsh Assembly Government.

View Pay Review Process