Supporting material for discussion of ‘Performance pay and wage flexibility in the Great Recession’ by Alex Bryson, John Forth, Lucy Stokes and Martin Weale Mark Beatson Chief Economist CIPD

Why do employers use variable pay? Type of variable pay Individual PBR Group PBR Profit-related pay ESOPs Merit pay Motivation Cost flexibility Incentivise individuals/teams ‘Good HR’ (HPW practices)

Why do employers use variable pay? Type of variable pay Individual PBR Group PBR Profit-related pay ESOPs Merit pay Motivation Cost flexibility Incentivise individuals/teams ‘Good HR’ (HPW practices) Not measured in ASHE Poorly measured in ASHE?

Source: Workplace Employment Relations Study, 2004 and Prevalence of variable and performance- related incentive schemes, (% of workplaces with 5 or more employees where some use was made of these schemes)

Employer provision of performance-related pay, (% of employers) Source: CIPD Reward Management surveys.

Cash bonus payments to employees in the previous 12 months, /14 (% of employees) Sources: CIPD Employee attitudes to pay surveys, 2008 to 2011 and CIPD Employee Outlook survey, winter 2013/14.

Impact of the economic downturn on pay and rewards, (% of employees) Base: all employees, including employees who did not think their workplace had been affected by the recession and don’t know responses. Employees could select more than one impact from a range of responses. Source: CIPD Employee Outlook surveys.

Changes in the nominal pay of employees in the previous 12 months, /14 (% of employees) Excluding don’t know/can’t remember responses. Respondents were instructed to exclude promotions, demotions, regrading and new jobs. Sources: CIPD Employee attitudes to pay surveys, 2008 to 2011 and CIPD Employee Outlook survey, winter 2013/14.

Performance reviews, their perceived link to pay and employee engagement, spring 2014 (% of employees) Excludes 6% of employees who did not know if their pay was linked to their performance review. Source: CIPD Employee Outlook survey, spring 2014.

Analysis of 2010 MOPS survey of 37,000 US manufacturing establishments [Bloom, Brynjolsson, Foster, Jarmin, Patnail, Saporta-Eksten and Van Reenen (2014), IT and management in America ]: –Management practice scores positively associated with productivity and other business outcomes (profits, growth, R&D, patenting) –Management scores positively associated with IT investment –Mean management score increased (based on recall) –Increased use of incentives and targets (based on recall) –Biggest increase in use of data-driven performance monitoring (based on recall) If data makes it easier to measure individual and group performance, will employers still need to rely on performance- related pay? What about technology?

Thank you