Tue, 25 May 2004
2004 NZ Remuneration Report Highlights Increasing Retention Problems, Greater Use of Bonuses and Concern with Pay Equity
Initiatives
Strategic Pay NZ Remuneration Report shows low unemployment levels placing new pressures on pay levels
AUCKLAND, 25 May 2004 - Strategic Pay, a leading New Zealand remuneration and performance management consultancy, has
released the findings of the bi-annual 'New Zealand 2004 Remuneration Report', highlighting increasing difficulties in
staff retention and a consequently higher use of bonuses to combat the problem. A valuable aid to senior executives in
setting realistic salary policies for the last twenty years, the Strategic Pay 'New Zealand 2004 Remuneration Report'
surveys nearly 200 organisations from a wide range of industries, including: manufacturing, distribution, retail,
finance, and the public sector.
John McGill, Senior Consultant at Strategic Pay and the Report's author, says the 2004 Report confirms modest 2%-3%
overall wage increases over the last twelve months. "While the modest increases are not surprising considering the
historical 16 year low in unemployment rates of 4.3%, the fourth lowest in the OECD, the most significant findings are
the underlying trends, which suggest underlying wage pressures."
Employers combating retention problem with a variety of tactics
According to Strategic Pay Managing Director, Dennis O'Callaghan, the 2004 Remuneration Report findings underline the
increasing difficulty for employers in retaining and attracting staff, especially for managerial and technical roles.
"Employers are combating retention problems by turning increasingly overseas to recruit as well as upskilling current
staff," he said. "In addition, employers are maintaining long term links with employees after they have left the
organisation for traditional reasons. This ensures that contact is maintained with personnel travelling on 'OE' or women
who are enticed back with flexible hours following maternity leave."
Key findings of the 2004 Report:
1) Modest wage movements of 2%-3% in 2004, though pay for top jobs increases by 3-4%
2) Low unemployment likely to increase wage/salary pressures.
3) Greater use of performance bonuses to combat retention difficulties - 30% of total package in some cases
Increase in performance bonuses to relieve wage pressure
Performance bonuses continue to grow as a percentage of total remuneration. "Ten years ago, variable pay comprised no
more than 15% in executive remuneration packages. Today, performance incentives and bonuses have boosted variable pay
components to levels as high as 30% for some positions," said Mr McGill. "While the private sector is turning to bonuses
as a means to combat retention difficulties, the public sector is more constrained by budgetary restrictions."
Employers perceive Pay Equity Taskforce to be ignoring market realities
"While the Government appears to be moving cautiously, expectations have been raised by the recent Report of the
Taskforce on Pay and Employment Equity. While conducting the 2004 survey, many employers felt that the Taskforce is
ignoring the realities of the labour market. While no-one denies the laudable aims of the Taskforce, it must be
remembered that different industries pay differently, for example the finance sector pays higher salaries than the
public sector, while some jobs such as IT functions pay more than other jobs. The labour market is dynamic with roles
disappearing while others are created. While the Government has signalled a five year strategy to research and action
these issues in the public sector, it is clear that pressure will build over the next 18 months for a more immediate
resolution."
About the Strategic Pay 'New Zealand Remuneration Report'
The six monthly Strategic Pay 'New Zealand Remuneration Report' is widely recognised as one of New Zealand's most
comprehensive analyses of remuneration and employment practices. For more than twenty years, the New Zealand
Remuneration Report has been published successively by PricewaterhouseCoopers Consulting, IBM Business Consulting
Services, and finally Strategic Pay Limited following the acquisition of the remuneration consulting business in 2004.
Today, the Strategic Pay 'New Zealand Remuneration Report' covers a wide range of industries in both the commercial and
public sectors. The Strategic Pay Report findings enable these organisations to establish realistic remuneration
policies for their employees.
By providing sound and reliable information, the Remuneration Report Database overcomes the difficulty of identifying
accurate marketplace remunerations for jobs of similar size and responsibility. As a result, organisations are kept up
to date with existing trends and developments concerning the remuneration of all salaried personnel.
The Remuneration Report evaluates employment positions using the Strategic Pay Job Evaluation Methodology. After taking
into account a total of ten measurement factors, the Job Evaluation Methodology allocates a points score for each
position. The ten factors include understanding the knowledge (education and experience) required for a job, the
organisation's complexity, the level of problems analysed by the employee and the responsibilities of the role.
About Strategic Pay Established in 1994 by Managing Director Dennis O'Callaghan, Strategic Pay Limited is one of New
Zealand's leading human resource management consultancies, specialising in integrated job evaluation, remuneration and
performance management. Following the 2004 acquisition of the IBM/PwC remuneration consulting and survey business which
was first established in 1982, Strategic Pay has become a leading provider of comprehensive remuneration survey data for
both the private and public sectors. Today, Strategic Pay has more than 250 clients throughout New Zealand and the South
Pacific, including large private sector corporations from all sectors of the economy as well as numerous central and
local government organisations.
More information on Strategic Pay is available at www.strategicpay.co.nz
ENDS