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The spring edition of our UK Reward Management Survey 2023 provides HR professionals with insights into current trends in the world of pay, reward and benefits. The data we collected enables us to track pay and reward trends and share best practice across a variety of sectors.

Here we summarise the latest statistics and insights you need to inform your approach to defining an effective reward strategy in the year ahead.

1. The Pay Outlook

In our last survey report in autumn 2022, we were in the wake of the autumn statement that sought to steady market volatility. The IMF is optimistic that the UK economy will avoid a recession in 2023 and this has, in turn, steadied pay increases for 2023. Nevertheless, those opting for higher pay levels are at an all-time high in the history of our UK Reward Management Survey.


Download the key findings from the UK Reward Management Survey Spring 2023.

Download UK Reward Management Survey Spring 2023 - Key Findings(pdf)

Over the decade that we have been monitoring HR practices, pay levels have consistently tracked inflation at around two to three per cent. Our spring survey reveals a significant shift to higher pay increases. 37 per cent will offer between four and five per cent and 33 per cent will offer over five per cent, reflecting the sustained pressure of inflation.

Out of cycle pay awards, excluding those used to address promotions, are also increasingly used as a retention tool, with 82 per cent using these types of awards. This raises the importance of a taking a holistic approach to reward decisions, to avoid pay parity issues further down the line.

Benchmarking remains a key priority for respondents who want to ensure their pay decisions are evidence-based and those who want to harmonise salaries against the market. This exercise can also help those who have observed that they have some catching up to do with the market to remain competitive.

group of colleagues discussing salary structures

2. Cost of Living Support

The cost of living crisis led to a third of employers paying a lump sum to support employees in 2022, paying a median amount of £750. 15 per cent have already decided to pay a lump sum in 2023, while 14 per cent are considering doing so, with the median of £550 noted. With fewer employers set to offer a lump sum payment, and those that are offering a lower amount, this indicates hope that the crisis will start to abate over the next few months.

Employers’ top three priorities for the year ahead include pay benchmarking, employee opinion surveys and benefits benchmarking, all of which helps design an evidence-based total reward strategy that attracts and retains the right talent. Opinion surveys are an effective way of learning directly from employees about the true value that they derive from their reward package and helping employers target support.

3. Bonuses and Benefits

Nearly three quarters of respondent employers operate a bonus scheme. While 67 per cent expect the number of people receiving bonuses will stay the same, around half think the size of payments will stay the same.

The usual patterns emerge in the data that show senior roles attracting bigger bonuses, but business confidence to reward main board directors once again following the uncertainty of the pandemic has been scrutinised recently, with organisations coming under scrutiny for the level of bonuses available to directors. Actual or expected median bonuses for main board directors have reduced from 41-45 per cent in spring 2022 to 26-30 per cent in spring 2023. Companies may be factoring in the CEO pay reporting requirements as more look to carry out executive benchmarking.

One third of respondents offer a flexible benefits scheme and 17 per cent are considering offering this. The top three benefits are more traditional in nature, with 95 per cent offering pensions; 84 per cent providing an Employee Assistance Programme; and 79 per cent offering Life Assurance. Particularly in times of constrained pay, many employers take the opportunity to emphasise the combined value of their total reward package through Total Reward Statements which can outline what is available to individuals and their uptake.

The cost of living crisis may be shaping and influencing wider benefits packages. 72 per cent are offering promotions and discounts on high street services and products to reduce spending by employees, while 56 per cent have already said that they are directly allowing working from home to reduce travel costs in response to the cost of living crisis.

4. Diversity and Inclusion

Overall, the 65 per cent of respondents have a diversity and inclusion strategy/action plan in place. 45 per cent state they are happy with the plan they have in place, whilst one in five confirm that they have one, but are intending to review it. One in five said that they do not have a plan in place but intend to develop one. Only nine per cent said that no plans were in place to create one.

The top three initiatives that have proved successful in achieving respondents’ diversity and inclusion goals include diversity and inclusion training, using specific programmes to create and embed a more inclusive culture, encompassing unconscious bias training. The second most popular initiative is the creation of working groups to connect one another with those who have similar lived experiences and fostering a culture of ‘belonging’.

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Flexible working was the third most effective initiative; offering flexi-time or part-time patterns of working can ensure that the right skills are secured for the role, beyond geographic limitations and prescribed hours. This accommodates those who have childcare and other responsibilities that may disproportionately affect those who are traditionally underrepresented in the workplace.

5. Recruitment and Retention

A shortage of skills is driving the war for talent. With 64 per cent reporting retention challenges and 74 per cent experiencing recruitment challenges recently, new recruits can increasingly command a premium, with 59 per cent quoting the need to offer salaries that conflict with those paid to existing staff.

With recruitment and retention challenges remaining widespread, employers are striving to provide better support to employees to drive down employee turnover. Offering greater support, development opportunities and aligning with their values by understanding what matters to them, businesses can build a sustainable culture that people want to join and stay in.

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Around half of HR and Reward Professionals do not expect any change to their budgets across the board. Around one in ten expect day to day HR costs to be cut by up to ten per cent. This suggests that HR teams are increasingly being asked to deliver more with constrained budgets. With so many challenges for HR professionals to tackle during the cost of living crisis, please do get in touch if you have any questions about how we can help you to optimise your approach.

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