By Accident or Design? The Case of Occupational Pension
Schemes in the Formation of Employer Reward Strategy
Manchester School of Management, UMIST
Recent British literature on the subject of remuneration falls into three
broad categories. The first is primarily prescriptive and, following the
tradition established in recent UK literature (e.g.: Sibson 1990, Lawler
1990, Gomez-Mejia and Balkin 1992, Hills et al 1994), relates to the ways
in which employer payment practices may be used as a means of aiding
the achievement of various organisational objectives (see Fisher 1995,
Armstrong and Murlis 1994, Friedman and Kaye 1994, Lockyer 1992).
The second main area of interest has been the publication of survey
results and case studies which have sought to establish the extent to
which employers have developed new approaches to remuneration policy.
Some of these have specifically focussed on remuneration policy
(e.g.: Casey et al 1992, Geary 1992, Kessler and Purcell 1992, Incomes
Data Services publications) while others have included the subject in the
wider context of general developments in human resource management
and industrial relations (e.g.: Purcell, 1992, Millward et al 1992). A third
group of publications have focussed on the interpretation of research
findings and have been primarily concerned with debating the extent to
which the management of employee reward has become less ad hoc in
character and consequently more strategic (e.g.: Smith 1992 and 1993,
Kessler 1995, Murlis and Wright 1993).
It is argued here, however, that an important deficiency in the existing
literature on these subjects is the absence of clear understanding of
what is meant by strategy when applied to the fields of reward management.
The main reason for the wide divergence of opinion that exists over the
nature of remuneration in the UK does not stem from a difference of view
about developing trends but rather from disagreements concerning their
significance when compared with past practice and about how they are
best characterised. The lack of any clear and agreed definition of the term
“reward strategy”, therefore, tends to hinder attempts to reach firm conclusions.
This article contributes to the debate by suggesting how the term might be
usefully defined. Four basic criteria of a reward strategy are identified against
which current practice in the UK can be judged.
The article goes on to apply the criteria by focussing on employer practice in
the provision of occupational pension schemes. In particular it assesses the
extent to which such schemes are designed to meet specific organisational
objectives or can be judged as forming part of a reward strategy.