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Our UK Reward Management Survey’s autumn edition provides HR professionals with the latest insights and statistics to inform their reward strategy.

Data was collected between September and November 2022, with an outstanding response rate, as 240 respondents (HR and Finance Directors and Reward and Compensation Specialists) shared their views from across a variety of sectors. These insights are representative of practices affecting more than 600,000 employees.

Here we examine the five key insights from the report.

1. Uplift in pay awards fail to keep pace with inflation

The survey results highlight significant changes to pay approaches. The most common pay award for 2022 is much more evenly split between those granting up to three and five per cent. Previous years have seen respondents mainly split between two and three per cent increases, with anything above four per cent being uncommon.

The significant shift to higher pay increases, after years of constrained pay, highlights the inflationary pressures employers are facing to support their people and retain top talent. With inflation driving up the cost of living, more employers are considering higher increases, with nine per cent giving pay increases over five per cent – only one per cent of respondents in autumn 2021 were considering this level.

2. Organisations consider additional support measures

Notwithstanding the higher pay reviews in 2022 that we have captured, employers are turning to second pay reviews and lump sum payments to supplement their employees’ income, showing that employers are not just acting to rectify weak pay awards. Organisations genuinely seem to be striving to offer what support they can.

10 per cent reported considering carrying out a second pay review in 2022, whilst 11 per cent are already offering a second pay review in 2022; the median additional pay award is three per cent. 46 per cent are targeting this additional review to support the lowest paid roles, whilst 21 per cent are making this second pay review available to everyone.

One in four employers are considering offering a one-off cost of living payment to ease the financial impact of the economic climate, with an average reported lump sum of £750 per employee. One in three offer this to all staff, whilst 40 per cent are providing this to lower paid/level employees only.

3. Out of cycle pay reviews supplement wider market pressures

As employers navigate the numerous pressures placed on their operational budgets, Paydata’s survey also queries whether the picture on pay is being supplemented and skewed by the increasing number of respondents who use out of cycle pay increases. Since autumn 2021, when 79 per cent acknowledged their use, this has increased to 86 per cent in autumn 2022.

Incremental pay adjustments raise the question, what impact does this have on the official average pay review increases provided by organisations? Whilst companies may report ‘official’ figures of three per cent increases, is this truly reflective of the pay review exercise when incremental awards are made based on business need?

4. Labour turnover is set to plateau

Recruitment and retention difficulties were the lowest we had captured in 2020, down to 15 per cent experiencing retention difficulties and 40 per cent having recruitment difficulties. However, this contrasts to the 77 per cent of employers who have recently experienced retention challenges and 86 per cent that have had difficulty with recruitment. The skills shortage is making recruitment and retention particularly challenging in certain sectors, such as care and technology.

However, the levels of employee turnover are expected to plateau since the levels of spring 2022 when the labour market was particularly buoyant. 24 per cent of respondents expect turnover to increase generally, a significant reduction from 50 per cent in autumn 2021, whilst 41 per cent expect turnover to stay the same, increasing from 23 per cent in autumn 2021. Following the market turbulence of 2022, an increasing number of employers expect less movement across the labour market. The forecast recession is expected to have a stabilising effect on job moves in the early part of 2023 as employees become more hesitant to jeopardise job security.

group of colleagues discussing salary structures

5. Employers must underline the full value they offer to ease recruitment challenges

While employers continually monitor and fine-tune the benefits packages they offer to support employees in a holistic way, the top three most popular benefits (pension scheme, employee assistance programmes, life assurance) highlight how the core benefits are designed to bolster the long-term financial wellbeing of the employee and their family. 75 per cent also offer private medical insurance and 83 per cent offer occupational sick pay. Healthcare cash plans are also popular, where employees can choose the level of support they require. Financial wellbeing is a priority given the cost of living crisis, with many employers offering greater access to financial tools and webinars, with some providing hardship funds to support those most impacted.

Offering flexible benefits enables the individual to tailor their reward package to their own preferences and priorities – ensuring that employees can cherry pick the ones that they value most. Whilst this can drive employee satisfaction from the reward package, it also drives cost savings for employers who can offer a ‘menu’ of options that can appeal to different demographics across the workforce. Half of respondents do not offer flexible benefits; 27 per cent offer flexible benefits and while 23 per cent do not offer this yet, it is under consideration.

Total Reward Statements are increasingly relied upon by employers who wish to underline the full investment they make in each employee. This is especially important in times where pay is constrained. Some employers are reporting that they are relaunching their benefits package to ensure that employees understand what is on offer to them in its entirety, providing greater communication around the range of benefits available and ensure employees understand the value they provide.

Have your say

If you would like any further information about the trends highlighted in our report, please get in touch with us today. We would welcome the opportunity to talk through your current approach to pay and reward and how this fits with your wider recruitment and retention strategy.


Download the key findings from the UK Reward Management Survey Autumn 2022

Download UK Reward Management Survey Autumn 2022 - Key Findings(pdf)

You can also register to make sure you contribute your views to the next survey in spring 2023, where we will be continuing to track HR trends and keep you up to date with the free, detailed report that respondents receive.

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