The increasing use of bonus and incentive schemes is boosting company
performance and staff motivation, according to new research by the CIPD.
The study, Guide to Bonus and Incentive Plans, shows that bonus schemes are improving
employee attitudes to work and decreasing staff turnover.
The majority of UK employers already use bonus schemes and four out of 10
plan to extend them in the next 12 months. Some of the most successful include
rewarding individual and team performance. Despite individual schemes being
widespread, combined bonus pack-ages are becoming more popular, claims the
Mike Cooke, director of group HR development at Abbey National, believes its
individual and team performance bonus system has increased productivity.
Annual pay rises at the bank are based on employees achieving their
individual objectives. Then two additional bonus payments – with a combined 13
per cent of salary – can be made depending on the performance and profitability
of the employee’s group.
"The combination approach has, to a large extent, been successful in
facilitating the growth of relevant well-designed schemes in the firm,"
But Duncan Brown, assistant director general at the CIPD and the report’s
author, warned against HR professionals making bonus structures too
He said: "The guide illustrates how an intensive examination of pay
structures leads to higher staff motivation and better results."
By Paul Nelson
M&S productivity turnaround
Marks and Spencer’s staff bonus
scheme has helped turn its performance around.
Helena Feltham, director of HR at M&S (left), explained
that a new bonus structure introduced last year has increased staff
productivity. The retail giant has linked staff bonuses to the performance of
individual stores over three-month periods. It consulted with all 60,000 staff
to ensure the new bonus system would be appropriate.
Last week the company saw UK sales for the first quarter of
this year increase by nearly 11 per cent compared to the same period in 2001.
Year-on-year sales are up 4 per cent.
Feltham said: "We have extended bonuses to cover all staff
in order to support the company’s turnaround and encourage employees to go the