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Philip Lewis: Cheltenham and Gloucester College of Higher Education, Cheltenham, UK
ACKNOWLEDGMENT: The author would like to acknowledge the help of anonymous referees' comments on earlier drafts of this paper.
There are signs that pay is shedding its Cinderella status and making the transformation from "the turgid, unimaginative and inflexible world of wage and salary administration" (Smith, 1993, p. 45) to a brave new world where integration with the organisation's goals and other personnel practices typifies the rhetoric, if not always actual practice.
This article explores this new world by examining the reward strategy for managers of one of the large High Street banks, called here Finbank. This examination is conducted by comparing the design and implementation of the bank's reward strategy with the prescriptive model of strategic reward advanced by Lawler (1995). The aim of the article is to explore the plausibility of Lawler's model.
The term "new pay" originated with the writing of Lawler and is taken up, among others, by Schuster and Zingheim (1992). It embodies the principles of the "brave new world" referred to above. Lawler (1995, p. 14) captures its essence in the following quotation:"The new pay doesn't necessarily mean implementing reward practices or abandoning traditional ones; it means identifying pay practices that enhance the organisation's strategic effectiveness."
There are notable features of new pay. It places considerable emphasis upon the organisation's reward strategy encouraging employee behaviours which are consistent with meeting customers' needs. Given the dynamic nature of those needs it is necessary that reward systems should be capable of rapid change (Ledford, 1995) and embody a range of initiatives (e.g. competency based pay, profit-related pay, gainsharing) in order to achieve flexibility. This implies a reward system that is not only flexible but simple to understand, operate and change. New pay reflects a belief that base pay should be sufficient only to attract and retain quality staff with base pay being supplemented by variable pay which is contingent upon individual and team contribution and organisational performance. Finally, new pay should serve to enhance mutuality between employer and employees through reward initiatives which are implemented with a high degree of employee involvement and result in both parties "winning" (Schuster and Zingheim, 1992). These features are underpinned by the fundamental concept...