Reward Challenges and Priorities for the year ahead: Insights for HR and Reward Professionals

HR Budget Outlook: Stability with targeted investment

The survey data paints a picture of steady, measured HR budgeting, with most organisations expecting minimal changes in their HR budgets over the next 12 months. Rather than widescale budget increases, there is a clear trend towards selective investment in key areas such as training, development and strategic projects.

Key findings on HR budgets:

• HR headcount: Over half (53 per cent) expect no change, with only modest increases or decreases forecast for the remainder.
• Training & Development: 28 per cent expect a budget increase of up to 10 per cent, while 46 per cent anticipate no change – indicating a gradual, cautious investment in skills-building.
• Day-to-day HR costs: 58 per cent predict no change, with 25 per cent expecting increases.
• Reward management: 50 per cent expect no change; 27 per cent anticipate a modest increase of up to 10 per cent.
• Projects and new developments: This area shows the highest potential for budget growth, with 28 per cent expecting a rise of up to 10 per cent and 7 per cent forecasting increases between 11-20 per cent. However, 44 per cent anticipate no change, reflecting overall budgetary caution.

The growing role of HRIS and technology in reward strategy

A notable trend across respondents is the increasing importance of HR Information Systems (HRIS) as a foundational enabler of workforce strategy. Whether the objective is to improve data accuracy, automate administrative processes, enhance compliance or facilitate more effective resource planning and recruitment, HR technology is now a critical focus area. 16 per cent of respondents plan to review or change their HRIS in the next 12 months; a further 19 per cent indicate it under consideration, while a similar proportion (20 per cent) have already done so in the past year.

In many cases, HRIS initiatives are being driven by broader organisational transformations—such as digitalisation agendas, mergers or restructures. However, the successful rollout of these systems remains a challenge, often hindered by capacity limitations within HR teams and the difficulty of securing buy-in from other parts of the business. One third of respondents reported that implementation took between three and six months.

An emerging area of interest is the use of AI-driven HR tools to support decision-making in areas like pay benchmarking, talent acquisition and workforce analytics. As AI capabilities become more accessible, organisations are beginning to explore how these technologies can enhance HR efficiency, accuracy and strategic impact.

A year of consolidation and focused investment

The UK Reward Management Survey findings for 2025 highlight a year of consolidation and selective investment across HR functions. Organisations are prioritising the fundamentals: competitive pay, fair and transparent reward practices, and active employee engagement. All while cautiously managing their budgets and resources.

While there is clear recognition of the need to invest in HR technology and digital transformation, many organisations are taking a measured approach, focusing on initiatives that deliver immediate value and support longer strategic workforce objectives.

How can Paydata help with your total reward approach?

As the talent market continues to evolve and external pressures persist, HR leaders will need to balance ambition with pragmatism – ensuring that reward strategies are not only competitive but also sustainable, transparent and aligned with the organisation’s long-term goals. If you have any questions or would like to know more about our reward strategy consulting services, please don’t hesitate to contact our team.