Compensation and Reward Framework

Define what the reward system is intended to support. Consider organisational priorities, the employment proposition, workforce needs and the behaviours leaders want to encourage. Make important trade-offs explicit, including simplicity, flexibility, affordability and consistency.

Agree a short set of reward principles that can guide actual decisions. A principle such as recognising contribution needs a clear account of what contribution means and which decisions it should affect. Record the agreed policy purpose, who can make decisions, what the review covers and how options will be judged.

Establish a defensible view of the work. Check role descriptions, job families, responsibilities and the method used to evaluate relative job value. Keep the requirements of the job distinct from the characteristics or performance of its current holder.

The Job Evaluation Framework can provide the detailed methodology for this work. The reward framework uses its outputs alongside other evidence. The International Labour Organization’s guidance highlights the importance of gender-neutral job evaluation. Read the ILO guide.

Show how job families and evaluation evidence support the proposed reward structure.

Decide how relevant external market evidence should inform policy. Specify the labour markets, role comparisons, geography, sector and reward components that matter to the organisation. Review survey dates, sample coverage, job matching and data limitations before interpreting any figure. Check whether comparisons concern base pay or total compensation, comparable working arrangements and the same currency and reference period. A familiar title is insufficient if the responsibilities differ.

A published percentile is a description of a particular dataset, not an automatic pay recommendation. Record uncertainty when the comparator is weak or the market is changing. Explain the proposed market position alongside internal fairness, affordability and the limits of the comparison.

Design the relationship between fixed pay, variable reward, benefits and recognition. Explain the purpose of each element, who is eligible, how it is earned or accessed and how it interacts with the others.

Where incentives are proposed, test the behaviours they may encourage, including unintended consequences for quality, collaboration, safety and longer-term results. Consider whether employees have meaningful influence over the measures. Document the reward elements, who is eligible, how they operate, cost assumptions and the risks to monitor.

CIPD’s total reward guidance recognises both tangible and intangible aspects of work that people value. Read the strategic reward guidance. Recognition and development should be considered alongside the financial offer without obscuring unresolved pay concerns.

Define how pay and reward can change. Distinguish progression within a role, promotion, market adjustments, structural corrections and performance-related awards. Each may require different evidence and authority.

Clarify eligibility, timing, decision criteria and how exceptions are handled. Review whether the performance evidence used is sufficiently relevant and consistent for the decision. Publish progression and review rules, including how managers check consistency, record decisions and respond to queries or challenges. Make the reason for movement explicit: a revised job, a market adjustment and recognition for contribution answer different questions and need different approvals.

Set the accountabilities that keep the system coherent. Define who proposes, reviews, approves, implements and audits reward decisions. Establish controls for access to sensitive pay data, conflicts of interest, exceptions, communication and periodic review.

Prepare managers to explain the policy accurately and escalate difficult cases. An exception should have a reason, authorised decision-maker and review trigger. Agree who maintains the policy, how decisions are explained and when the system will be reviewed after launch.