by Joseph Wallace & Noreen Clifford

II. The types of flexibility introduced

D. Reward management

1. Pay determination

In recent years Ireland has witnessed a return to centralized pay determination, with the emergence of a number of national agreements since 1987. These agreements are discussed further in subsequent parts. This situation is clearly reflected in the findings of the CUL survey, with a large percentage of respondents reporting that pay is determined at the national level, particularly for the category of manual employees (see figure 1.4). However, at the higher levels of the organizational hierarchy, particularly for management, the determination of pay is more likely to be individualized. Table 1.18 gives a more detailed breakdown of the level at which pay was determined for each job category, for the years 1992 and 1995.

It is obvious that a number of mechanisms are being utilized by organizations in relation to pay and that pay is being determined at differing levels. The figures in table 1.18 conflate the national/industrial level, since industrial level pay determination is no longer very relevant in the Irish context. This is due to the period of National Wage Agreements in the 1970s when industry-bargaining groups started to fall into disuse (Gunnigle et al. (1994), and the subsequent greater openness of the Irish economy in the 1980s. Predictably, there is a trend toward national/industry level pay determination, with only a slight decrease between 1992 to 1995 in the percentage of the pay of manual rates being determined at this level.

Figure 1.4. Level of basic pay determination, 1995

Source: Cranfield-University of Limerick Survey, 1995.

Table 1.18. Level of basic pay determination

	Management			Professional/technical			Clerical			Manual
	1992	1995		1992	1995		1992	1995		1992	1995
National/industry wide	30%	35%		37%	40%		51%	54%		67%	62%
Regional	0%	0%		1%	1%		5%	5%		7%	9%
Company/division	29%	31%		25%	26%		27%	24%		19%	12%
Establishment	14%	10%		16%	15%		15%	13%		13%	10%
Individual	44%	44%		33%	29%		19%	21%		7%	6%
Source: Cranfield-University of Limerick Survey, 1992 and 1995.

The period 1992 to 1995 showed slight decreases in the use of individual pay determination for professional, technical and manual employees, and a slight increase for clerical workers. The relatively low rate of adoption of this form of pay determination at the lower levels of the organizational hierarchy may be due to a number of factors. Given traditional trade union opposition to individualized pay, one potential explanation is the higher union density for these work categories and the effects of collective bargaining. A further rationale is the perceived difficulty in determining individual contributions to organizational success at the lower levels of the organization.

There has been a general trend toward increases in the use of variable pay in Ireland in recent years. The findings of the 1995 survey confirm that this trend is continuing (table). Table 1.20 details the kinds of incentive schemes in use in Irish organizations. The use of individual commission has decreased significantly since 1992 for each category of worker. Merit, or performance related pay, has increased particularly for clerical workers. This is an indication that this form of incentive, which has traditionally been associated with management and the higher levels of the organization, is beginning to filter further down the organizational hierarchy. Group bonus schemes are also on the increase particularly for management and clerical grades. This possibly reflects an increased emphasis on team work and group performance. The utilization of profit-sharing schemes has also increased slightly since 1992.

Table 1.19. Change in the total reward package,

1992 and 1995

	Increased			Decreased			Same			Don't know
	1992	1995		1992	1995		1992	1995		1992	1995
Variable	32%	26%		4%	4%		56%	61%		4%	3%
Non-money benefits	19%	13%		2%	6%		67%	68%		3%	3%
Source: Cranfield-University of Limerick Survey, 1992 and 1995.

Table 1.20. Use of incentive schemes, 1992 and 1995

	Management			Professional/technical			Clerical			Manual
	1992	1995		1992	1995		1992	1995		1992	1995
Share options	23%	23%		14%	14%		9%	12%		9%	10%
Profit-sharing	16%	19%		12%	13%		11%	13%		10%	10%
Group bonus	15%	21%		13%	16%		11%	16%		14%	15%
Merit/PRP	49%	51%		43%	45%		29%	37%		13%	15%
Individual commission	31%	6%		24%	14%		14%	7%		12%	2%
Source: Cranfield-University of Limerick Survey, 1992 and 1995.

The size of the organization would seem to have an effect on pay determination. Large organizations are more likely to have pay determined at national level for all employees,. Small organizations, on the other hand, tend to engage to a greater extent in determining pay increases at the level of the individual. On the issue of financial flexibility, as expressed by the use of various incentive schemes, the findings clearly reflect the fact that large organizations are more likely to utilize profit-sharing, group bonus schemes and merit or performance related pay, for all job categories.

Table 1.21. Size as a determinant of basic

pay determination

		50-199					200+
		Management	Professional	Clerical	Manual		Management	Professional	Clerical	Manual
National		31%	36%	49%	64%		37%	42%	56%	60%
Individual		51%	31%	26%	11%		40%	29%	17%	3%
Source: Cranfield-University of Limerick Survey, 1995.

Table 1.22. Organizational size and the use of

incentive schemes

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