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2025 has seen HR and Reward professionals from across the UK come together in a series of HR and Reward workshops to share pressing organisational challenges and priorities. From engineering to care, housing associations to healthcare, each sector faces its own unique pressures, but common threads are unmistakeable across industries.

Here we draw together the key trends, strategies and creative responses raised by HR and Reward professionals that are shaping people agendas across the country. These themes offer insights into how organisations are navigating change, opportunity and constraint.

1. Pay reviews, pay compression and cost pressures

Unsurprisingly, pay review cycles have dominated conversations across almost all sectors. Many organisations had recently concluded their annual reviews or were in the midst of planning for mid-year increases. A persistent issue was pay compression – where pay differentials between roles narrow and it is hard to achieve differentiation through pay between roles – especially in sectors where frontline workers are now being brought in close to or at the National Living Wage (NLW) thresholds.

Employers reported employee morale and fairness concerns among experienced staff whose pay has been eroded in relative terms. The recent increase has blurred the lines between entry-level and more experienced roles. One organisation described it as a “flattened reward”, where incentives for development or longevity have little financial value. As explored in a recent article on salary compression by Personnel Today, organisations that fail to address these disparities risk not only dissatisfaction but also increased attrition among skilled staff.

In sectors where skills premiums are expected, the NLW also plays a role – especially for early-career entrants. Several employers described the challenge of balancing internal equity with external competitiveness.

EU and UK pay transparency regulations mean organisations across sectors are reviewing equal pay, recruitment practices and how they report on diversity. Several highlighted gender representation in leadership as a sticking point.

Performance-based pay is gaining momentum, but it is often limited by legacy structures or budget constraints. Job evaluation is being reviewed in several sectors as organisations realise the importance of maintaining consistent grading and pay decisions.

2. HR systems and automation: A push for efficiency

A striking number of organisations across all sectors reported reviewing or implementing new HRIS platforms. Across the board, the driving factors are clear: automate to reduce cost, improve efficiency and enhance people analytics.

One organisation ran an internal and external user survey to test satisfaction with their current system. They ultimately decided to retain it, as feedback showed the platform was “better than perception suggested.” This data-led approach was echoed elsewhere, where new systems are tied to broader business transformations around grading, performance and benefits.

Employer report automation being embedded into broader business transformation strategies – supporting job evaluation, performance management and even reward redesign. One employer is now offering interest-free housing loans to younger workers, which is a modern benefit enabled by streamlined systems.

Importantly, automation is not just about efficiency. Organisations are also using tools like Copilot or Teams to transcribe ER meetings, with trade union agreement, improving transparency and freeing up HR capacity for higher-value work. The long-term vision is clear: reduce manual admin, empower line managers with insight and create space for HR to be more strategic.

3. Recruitment and retention: The war for talent continues

Recruitment struggles are widespread and whilst the challenges vary by sector, a shortage of key skills is prevalent; employers report a ‘talent war’ and the ‘poaching’ of skilled workers.

Retention, not just attraction, is the bigger concern for many sectors, particularly in those with high turnover. Workshops debated whether poor induction processes, lack of clarity around career progression and uninspiring job descriptions were contributing to the churn. Apprenticeships and early career strategies were frequently raised as critical retention levers.

Organisations debated how to address ‘polygamous working’, which is a growing trend where employees hold multiple jobs to supplement income or achieve flexibility. One employer is exploring flexible job shares and income guarantees in response. Outlined in Personnel Today, they suggest employees are increasingly motivated by flexibility, income diversification and purpose — not just stability.

4. Performance, recognition and career development

Performance-based pay, recognition platforms and structured career pathways were hot topics, particularly in sectors striving to modernise legacy structures. In some sectors structured reward for individual contribution is emerging, while others are rethinking performance related pay at the CEO level.

Recognition initiatives remain varied. From unsung hero awards and cash/vouchers for employees tied to outstanding performance to more organisation-wide events to drive employee engagement, such as summer barbecues and team lunches. Recognition came through strongly in sectors facing retention challenges, with organisations updating or enhancing Long Service Awards.

Several sectors are investing in values-based recognition and exploring new tools to boost financial wellbeing, inclusivity and mental health. There is a growing interest in how these schemes and appreciation frameworks can support inclusion, neurodiversity and wellbeing.

Career progression was also under the spotlight and diversity in leadership remains a challenge — especially bringing more women into senior roles. Several firms are investing in training for “accidental managers” to ensure progression doesn’t outpace capability. Organisations are increasingly focusing on early careers strategies, succession planning, and leadership training to tackle this long-term.

5. Benefits, total reward and communication gaps

With cost constraints biting, many organisations are refreshing their benefits programmes to ensure value for money and relevance. Benefits reviews were widespread, also triggered by system upgrades. Many organisations are reassessing:

  • Providers (insurance, health, platforms)
  • Car allowances (as either perks or essentials)
  • Financial wellbeing tools (to support employee education)

Some organisations are considering neurodiversity support and mental health-focused benefits to reflect evolving employee needs. Private medical insurance cost increases also triggered renewed focus, with companies reviewing providers, raising excess levels or considering core-plus models to manage budgets.

A consistent theme emerged: employees do not know what benefits they have. Communication and visibility came up repeatedly as a key issue to fix – through benefits platforms, annual windows, and manager engagement.

Employers report considering frameworks for non-pay rewards and piloting tools like cash spot bonuses for exceptional work. Others are planning formal staff recognition strategies tied to engagement survey feedback. Total Reward Statements are a useful tool to fix this disconnect – outlining the full benefits uptake for each employee and the range of traditional and non-traditional benefits available to each staff member.

6. Organisation design, change and harmonisation

Structural change is underway across many sectors through mergers, restructuring and strategy refreshes; requiring the harmonisation of terms and conditions, job evaluation and grading frameworks. Changes in senior leadership are prompting reviews of organisation design and operating models.

HR leaders raised concerns about compassion fatigue, burnout and the emotional toll of frontline roles. There is growing investment in mental health support, wellbeing platforms and flexibility models to sustain staff through emotional strain. One organisation called this “the invisible cost of purpose-led work”, a cost HR is trying to mitigate.

Several organisations are also addressing data quality, using HRIS implementation as an opportunity to cleanse, reclassify and train managers on how to use data insights for better decision-making and build stronger foundations for strategic workforce planning. Job architecture, grading and pay structures were hot topics of focus.

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HR leaders across sectors are navigating an unprecedented confluence of challenges: rising employment costs, workforce expectations and regulatory changes. This is all while transforming systems and redefining what reward and recognition look like in 2025.

The need for adaptive, data-informed and employee-centred HR strategies has never been clearer. While each sector faces unique pressures, the shared direction is towards better structure, smarter technology, clearer communication and stronger value propositions to retain and engage the modern workforce.

As organisations move into mid-2025 and beyond, it will be agile and proactive HR teams that lead the charge, ensuring people strategies truly help their organisations thrive in the new world of work.


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