How do you reward staff?

Almost half of organisations no longer award employees an annual pay increase or cost of living adjustment, according to the annual reward management survey from the Chartered Institute of Personnel and Development.

Instead, the current trend is to distribute increases to departmental heads to allocate across staff as they see fit, the CIPD research suggested.

Three-quarters of companies now use a combination of factors when awarding pay increases, the survey added, such as individual and team performances and market rates.

"The decline in the yearly traditional pay rise seems to be spreading throughout employment sectors," said Charles Cotton, CIPD employment and relations adviser.

"Changes to pay and reward packages can often leave employees confused, demotivated and in the dark about what they need to do to achieve reward and recognition," he added.

"Line managers can play a key role in delivering messages around pay, but they need to be coached and developed on how to communicate messages around pay increases and benefits more effectively."

Changes to pay and reward packages can often leave employees confused, demotivated and in the dark about what they need to do to achieve reward and recognition

The research also revealed that the majority (70%) of companies use cash-based bonus schemes or incentive plans but 40% intend to amend this scheme in the near future. One third of employers already operates both recognition and non-cash incentive schemes.

Final salary pension schemes have also been abandoned by private sector employers, with only one-fifth of schemes now open to new members. More companies are putting money into defined contribution arrangements instead, the CIPD found.

Companies are also attempting to ensure benefits fit the organisation's environmental strategy, with the main motivation for this to enhance and protect their reputation. The CIPD claims this can also have an impact in attracting and retaining staff.

"Attempts to align the environmental practices with the employer and product brands can make it easier to attract, retain and motivate talent as well as retain and attract new customers and clients in an increasingly competitive market," said Cotton.