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2020 was defined by the pandemic and ongoing restrictions have continued into 2021, impacting daily life as the government races against the surge in cases to vaccinate the population.  Our autumn 2020 Reward Management Survey identified the key challenges that employers will face throughout 2021.

Here we outline the key insights shared by the 204 respondents across a variety of sectors, representative of HR practices affecting half a million employees.

1. Employee wellbeing and mental health

All employers are focusing on the mental and physical wellbeing of their people, with 90 per cent already having policies and procedures in place to support mental health and wellbeing. This has never been more important than at such a turbulent time globally, where people are working remotely or on the frontline, with the multitude of stressors associated with each.

The top three initiatives offered by employers to tackle mental health and employee wellbeing include:

  1. Employee Assistance Programme (91 per cent)
  2. Access to counselling services (89 per cent)
  3. Flexible working (87 per cent)

35 per cent also have a dedicated budget to support mental health and wellbeing, a topic that has dominated headlines given that we have now entered the third national lockdown to contain the virus. Isolation and remote working present the risk of loneliness and disconnection from the office, with the additional challenge of home schooling and juggling of responsibilities that threaten to undermine wellbeing, accounting for the 87 per cent of employers offering flexible working to accommodate this.

2. Absence policies

In an age where presenteeism used to see many employees struggle on and get to the office, during a pandemic, controlling the spread of a virus which has a multitude of symptoms has been a key priority for employers. One third of respondents had reviewed their sickness policy as a direct result of Covid-19.

However, many have reported that sickness levels have actually decreased throughout lockdown and again coming into the winter. The threshold for a sick day seems to have also reduced because employees have been able to work from the comfort of their own home. Although, there is the argument that this could also be attributable to the fear of redundancies that might follow due to the negative impact on the economy over the year.

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Some employers have revised their sick pay policies to ensure people self-isolate fully, discounting Covid-19 related sick days to ensure that people are not deterred from being cautious about returning to work.

3. Employee communications

Strong senior-level communications may now be routinely expected, with 94 per cent using this as a tool to maintain employee engagement over the year. According to our HR Groups, bi-weekly or weekly CEO catch-ups, Senior Team Town Hall virtual meetings and virtual Q&As have been offered across a variety of sectors. Some reported that they have received their highest levels of engagement scores in pulse surveys sent out over the year, demonstrating the impact of a strong system of communications.

Communications were also key in the effectiveness of mental health and wellbeing programmes. Maintaining the momentum behind visible manager support and top-level communication is crucial to drive employee engagement. When returning to office environments was encouraged, communication was also critical to managing the process. Employers created videos to talk employees through revised safety features in the office, prompting some employees to become upset due to the emotional connection they have with work. For many, this brought the realisation that they are not returning to the same office they remember.

4. The return to work and the ‘new normal’

By October, the biggest proportion (25 per cent of respondents) reported that only between one and five per cent of employees had returned to the office. Levels decreased once again amid talk of a second lockdown or circuit-breaker in October.

Just 26 per cent think that they will return to employees working 100 per cent of their hours within the office, showing the long-term impact of the pandemic on the prospect of employees making the physical return to work. However, only one in five employers think that fully remote roles will become the norm. 14 per cent are reflecting the fact that many do not anticipate having all employees in at once, making the decision to reduce the office space they currently hold.

The world of work post-pandemic is still to be defined, but many speculate that they may only require employees to physically go to offices for collaborative projects and require the rest of work to be done at home. Others have sought their employees’ views on their favoured ways of working in the future, showing the collaborative and supportive approach taken by many employers to define how they want to operate in the coming years.

5. Pay trends

The majority of organisations (53 per cent) had their pay review in 2020 between January and April, with 34 per cent offering between two and three per cent and 32 per cent offering one to two per cent.

Many warn that tough trading conditions over this period will impact 2021’s review, with 16 per cent projecting no pay rise and 56 per cent predicting a return of the two per cent pay rises, a decline from three per cent in 2020. The effects of Covid-19 saw some impose a pay or hours reduction, which were mostly restored in June and July. Around one quarter reported operating a pay freeze in 2020, doubling from 12 per cent in spring 2020. At the same time in autumn 2019, only three per cent of respondents reported that they were not intending to grant a pay rise, showing the prevalence of pay freezes in 2020.

When pay reviews were granted, 32 per cent of employers granted an across the board increase, perhaps reflecting the sense that everyone is in this together. Some customers have reported senior management taking pay cuts and forgoing bonuses, enabling employers to provide greater financial support to those paid less in their organisation.

Some companies paused their bonus payments until later in 2020, whilst others reduced or cancelled payments. In spring 2020, only six per cent thought that the number of people receiving bonus payments would increase and this increased slightly to nine per cent. Similarly, the four per cent in spring 2020 thinking the size of bonus payments would increase grew to seven per cent. The majority of respondents reported that the number of people receiving a bonus would stay the same, but when it came to predicting what would happen to the size of bonus payments, 38 per cent said it was too early to tell.

6. Redundancies and headcount

Only one in five employers expect challenges in recruiting and retaining people in the next 12 months. These are the lowest figures we have captured since the financial crisis in 2008/2009. As others are operating recruitment freezes during this period, we are increasingly asked, is it an employer’s market?

In order to weather the storm, 41 per cent redeployed employees to other areas of the business to retain key talent and avoid making job cuts. 39 per cent made redundancies or restructured as a result, whilst 56 per cent have utilised the Coronavirus Job Retention Scheme. 43 per cent have no plans to make redundancies at this stage. Many are hoping that this year offers a return to normal business operations, with the 12 per cent still considering redundancies, potentially mirroring those operating a pay freeze to survive this period of turbulence.

Around one third of respondents identified that roles across the board, including those from senior to junior had been affected by redundancies. 28 per cent also identified central support roles and 19 per cent highlighted administrative and back office staff whose workloads had reduced as the most at risk of being made redundant. Many cited the need to reduce overheads as a direct result of the reduced revenues they had experienced.

Get in touch

Register here to ensure you contribute your views on pressing HR matters in our upcoming spring 2021 UK Reward Management survey and receive your free copy of the results. Call us today if we can help shape your approach to the issues outlined above, especially in relation to driving employee morale over Lockdown 3.0.


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