Study points to savings for firms with no pay structure

Salaries
for the same job can vary by as much as 60 per cent across the UK, according to
a report by MCG Consulting Group.

While
differences in individual performance and progression through salary scales can
account for up to 40 per cent of the differential, the authors of the report
contend that salaries and pay can deviate by as much as 20 per cent from what
is a fair and competitive level for any particular job.

The
report concludes that there are large savings to be made in the medium term
among organisations which do not have an audited and benchmarked pay structure
in place.

For
those organisations with pay structures above average levels there are savings
of up to £1m a year to be made in a 500-employee company by adopting a strategy
to cut salaries. MCG speculates that companies which pay below average salaries
can, in theory, make similar savings by increasing pay to attract
better-qualified staff, create greater motivation and reduce employee turnover.

The
study also reveals that for personnel specialists the overall earnings increase
of between 5 to 6 per cent continues to be quite high compared to levels of 3.5
per cent in the MCG 2000 last quarter salary survey.

While
HR managers still lag behind those in other sectors when it comes to earnings,
according to MCG, top personnel directors’ pay exceeds £250,000 for the first
time. The report shows there are specific skills shortages in some HR
disciplines such as compensation and benefits.

But
Nick Page, the CIPD’s adviser on pay and employment conditions, criticised the
"growing obsession" of some employers to focus on the "going
rate". He said, "Employers have got to weigh up the market rate and
where they fit into it, but they also need to weigh up the people they need. If
companies want a strong performance then they may want pay to be above the
average."

By
Ben Willmott

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