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July 2006
IAG follows Westpac down low pay cul de sac
IAG has recently moved to a pay system that individually assesses each staff member’s performance, and then provides each worker a rating from 1 to 5. These ratings, along with each person’s current salary, are then entered into a ‘matrix’, to determine that person’s pay increase.
The allocation of money to each corner of this matrix depends on what IAG determines will be its ‘total spend’, or the amount it is willing to increase its wage budget.
This type of pay system is useful to a company because it keeps a cap on its wage budget. Companies can manipulate both the assessment figures that people are given, and also the pay rise that is allocated to each performance rating. It allows companies to appear to offer reasonable pay rises, but ensure they are only available to a limited number of staff.
This pay model is almost identical as exists in Westpac. Westpac has had this type of pay system for over 10 years now. And the news is not good. After a few years it became apparent that staff in Westpac just weren’t moving through their pay system. They were getting stuck at the lower levels of the matrix, even when they were performing at a satisfactory level.
Finsec Union Councillor, Maxine Mullen, argues the system left many workers stranded on low pay rates:
“We discovered that it took the average Westpac employee around thirty years to move from the bottom to the top of their pay system. That’s a long time. Westpac’s target pay system caused a nationwide strike the day before the Christmas holidays last year. It has become a burden, not just for workers but for customers, the bank and the broader economy.”
IAG has indicated that its own identical system has these problems too. It is aware that only a limited number of people progressed through the last round of performance assessments.
Breaking news: Vero joins the trend.
Vero has just told Finsec’s advocate that it too will look to adopt this ‘matrix’ pay system. Is this a trend in the insurance industry?
