The median paybill increase in the finance sector was 3.2% between September 2003 and May 2004, 0.2 percentage points above the whole-economy figure of 3%. Rewarding individual performance with merit pay and bonuses is a thriving trend in the sector, and rising optimism means that companies are evaluating pay levels to ensure a competitive market position, according to a report released today (30 July 2004) by IRS Employment Review, published by LexisNexis.
Pay awards achievable by individual employees ranged from nil - typically where employees do not reach the required performance level - to 25.6% for the best performers at one bank.
The results are available in the new issue (804) of IRS Employment Review (www.irsemploymentreview.com
Key findings:
Over 80% of finance settlements set the level of pay award based on the performance of the individual.
Paybill costs are higher than in the previous year, with a median increase of 3.2%. Over half of all merit rises fell between 3% and 3.6%.
Just 11 settlements of the 62 analysed were a basic award with no merit increase. The median payment among these settlements was 3%, the same as the whole-economy figure over the same period.
Bonus payments are still popular, used by more than half (56%) the settlements analysed. Twenty two settlements paid potential bonuses worth over 5%.
Banking settlements - analysis of the 36 pay settlements within the banking sector reveals that, for the third year running, the median paybill increase within the sector is 3%. A matched sample of 31 settlements reveals that 52% of the 2004 settlements were higher than the previous year.
Insurance settlements - IRS pay researchers collected information on 20 pay settlements concluded within the insurance industry.. As with banking, performance is still by far the most popular method of allocating pay increases, with 59% of organisations using it. The merit budgets available for pay awards ranged from 2% to 6.2%. A matched sample shows 59% to be higher than those awarded the previous year
IRS Pay and Benefits editor, Sheila Attwood said:
ìThe current economic climate is not a difficult period for financial institutions, although there is no suggestion of an imminent boom. This slow progression is marked in the pay settlements of 2003/04. Pay increases are slightly higher than the comparable period a year ago, and the continued use of complex performance matrices and market-related pay can be seen to be lifting the pressures of cost-cutting that have been present in the sector over the past few years.î
Pay in finance banking on brighter prospects
The median paybill increase in the finance sector was 3.2% between September 2003 and May 2004, 0.2 percentage points above the whole-economy figure of 3%
