Bank moves on performance-related pay

In a move which could have implications for the traditional incremental-based pay system in Ireland's banking sector, one of the country's smallest banks,Ulster Bank, announced recently that it wants to introduce a performance-related reward system.

One of Ireland's smallest banks, the Ulster Bank, is seeking to replace its incremental-based pay system with a new performance-related reward scheme for most of its 1,000 staff in the Republic of Ireland. The bank's proposals have been resisted by members of the banking union, the Irish Bank Officials Association (IBOA). They have, however, been accepted by its staff in Northern Ireland who are part of the British industrial relations system.

Faced with a ballot for industrial action after it put forward a "final" set of proposals on the issue recently, Ulster Bank management decided in May 1997 to defer implementation of the new system. Talks were arranged and some further modification to the bank's already amended proposals are now likely.

Informed banking sources suggest that the resistance to the measures by its staff in the Republic may be due to a fear among the younger staff about how their performance will be appraised. There is also a level of frustration among older staff that their contribution is no longer valued. The IBOA union is seeking to secure the best terms possible in the knowledge that the two main banks in the Republic, AIB and Bank of Ireland, are likely to consider the introduction of similar performance-based reward systems.

Ulster Bank's new performance-related scheme is aimed at junior staff ("bank official" grade), most of whom joined the bank during the past seven years, but who now find promotional prospects are restricted as the junior grade attracts no additional incremental increases after eight years of service. The existing incremental-based pay scales would be replaced by four new grades, allowing for performance-related progression.

To assuage the fears of its "senior bank official" grade employees who have longer service records with an incremental salary path, any individual may voluntarily opt out of the new system. Those that decide to take up this option will be subject to so-called red circling, or be guaranteed to benefit under the existing structure until 2000, when their situation would be reviewed.

Ulster Bank says that at least 80% of staff who agree to come within the new structure would receive an annual performance-rating which would entitle them to a 6% salary increase. This would be in addition to cost-of-living increases due under Ireland's centralised pay agreement, Partnership 2000 (IE9702103F). The main thrust of the proposals is to give incentives to younger employees and to reward performance more accurately, the bank maintains. It insists that the measures are not aimed at cost reduction.