Ibec's new report shows that almost six in 10 companies in this country are offering performance-related pay, writes DAVID LABANYI

ALMOST SIX out of 10 companies operating in the State offer performance-related pay, with 63 per cent saying such schemes are an effective motivational tool, according to a new report.

Ibec’s biannual human resources management survey of 298 organisations found that larger firms operating in high-tech manufacturing or financial services were the most likely to offer bonus schemes.

Among companies where such schemes were viewed as ineffective, the problem was usually in the scheme design. Bonuses levels were usually equivalent to between 5 and 10 per cent of annual salary.

The HRM Survey and Benchmarking Report 2008-2009 also found more than four out of five (84 per cent) of companies surveyed had a performance review system for employees. This was an increase on previous surveys in 2006 and 2004 where the totals were 75 per cent and 70 per cent respectively. One-third of companies said they had twice-yearly staff appraisals.

The increasing popularity of such appraisals can be seen from a finding that 34 per cent of those companies not measuring performance plan to start doing so over the next two years.

The companies surveyed employed almost 112,000 people. Questionnaires were returned mid-2008 and reflect the economic circumstances then.

Investment in training was just 3.3 per cent of overall payroll costs, similar to earlier Ibec surveys. This level of investment is described by Ibec as insufficient to “upskill the workforce, particularly in sectors facing rationalisation”.

At the same time, 92 per cent of companies said they supported employees who pursued external education.

The changing Irish economy is reflected with the number of manufacturing firms responding to the survey lower than pervious years while participation by the service sector increased. Just over a third (38 per cent) of respondents in the latest survey were involved in manufacturing.

More than half (52 per cent) said there had been a rise in demand for flexible working arrangements for existing staff to facilitate better work-life balance in the workplace. In response to this demand, more than four out of 10 companies indicated that they had increased their flexible working arrangements over the previous 12 months.

However, while demand for such flexible working remains high, the overall percentage of companies offering such schemes has declined slightly in recent years to 72 per cent in 2008, down from 81 per cent in 2006 and 82 per cent in 2004.

There was no difference between unionised and non-unionised industries in terms of the provision of flexible working arrangements.

According to the survey from a company point of view the main reasons for offering flexible working arrangements were to improve employee morale and retain staff.

Four-fifths of firms operated a designated human resources department, with this percentage rising to 90 per cent among foreign-owned multinationals.

In terms of activity a key human resources task was to monitor work absence, which was done formally in more than 70 per cent of companies.

Employee turnover was 12.2 per cent in 2008 while the absence rate was 3.8 per cent, according to the survey.

The average number of human resources staff per 100 employees was 1.7, which is similar to the findings in 2006.

More than nine out of 10 respondents had an internet and e-mail policy with about a third having a data protection policy. One-quarter of employers tested their staff for drugs and alcohol.