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Our autumn UK Reward Management Survey has captured insights into pay awards, bonuses and employee turnover. In addition, we have explored employer attitudes towards business planning around Brexit, organisations’ approaches to managing mental health and wellbeing in the workplace, and current activity around setting competitive benefits packages.

138 HR Directors, Finance Directors and Reward/Compensation Specialists provided their insights into practices affecting around 380,000 employees.

We outline the five key trends affecting reward professionals in the UK.

1. Business optimism wavers as Brexit remains an unknown

Political turbulence persists, with another general election scheduled before Christmas and the campaign trail in full swing. This has postponed a potential ‘no-deal’ Brexit and we note the effect this uncertainty is having on businesses and the impact on their operations. Only half of organisations have a plan in place to protect the business or identify potential opportunities, whilst only six to eight per cent of businesses see Brexit as an opportunity on any timescale.

Whilst business optimism had remained steady with 57 per cent of respondents expecting revenues to increase in spring 2019, consistent with projections for the last three years, our autumn survey has captured a notable decline in business confidence to 31 per cent expecting increased revenues.

2. Pay awards and out of cycle awards remain steady

Up to three per cent pay increases remain most popular amongst respondents, sustaining wage growth as it tracks just above inflation. The two most quoted drivers for pay increases are external relativities and targeting high performing individuals – putting a firm focus on recruiting and retaining the right talent through competitive reward packages. Loyalty no longer translates to automatically higher pay, with two thirds of organisations having to offer new recruits salaries that conflict with those paid to existing employees.

We continue to monitor the role of out of cycle pay increases, as 75 per cent cite market pressures as a key driving force behind their use. These types of increases supplement steady pay awards as they bridge the gap between official pay review figures and wider market pressures, most commonly accounting for up to one per cent of annual pay bills.

3. Recruitment challenges are acute for employers

Over half of respondents (55 per cent) have experienced difficulty in retaining people and anticipate ongoing retention difficulties. However, more respondents revealed difficulties with recruiting people over the past 12 months, with 66 per cent facing challenges. 60 per cent also anticipate difficulties in recruiting over the next 12 months.

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Download the key findings from the UK Reward Management Survey Autumn 2019.

Download UK Reward Management Survey Autumn 2019 - Key Findings(pdf)

Organisations believe that Brexit will have the biggest impact on skills and labour shortages, with 33 per cent saying investment in this area will be increased as a result of Brexit and 36 per cent saying it is too early to tell. This is in contrast to half of organisations saying that investment in other HR/Reward operations (pay review funding, project budgets and the employment of young people) will remain the same.

4. Employee benefits increasingly reflect employee values

66 per cent reviewed their benefits offering in 2019 and 82 per cent expect to in 2020, demonstrating how keen organisations are to ensure they are offering competitive benefits packages that reflect value in employees’ eyes – a key recruitment and retention tool. The top three reported benefits are:

  1. Pension scheme (97 per cent)
  2. Life assurance (89 per cent)
  3. Employee assistance programme (86 per cent)

The fact that pensions consistently feature as the number one benefit is not surprising in itself, as the government has put the onus onto the employer to offer every employee access to a pension scheme through auto enrolment. This means the decision regarding pensions comes down to how much the employer should contribute. Employers should ensure that employees know their options and the long-term value of the benefit. More creative benefits consistently feature that relate to employee health and wellbeing. 70 per cent offer bike to work schemes, 42 per cent offer gym memberships and 57 per cent offer health check-ups, showing that many businesses are looking to support health and wellbeing. This illustrates the different approaches organisations take when it comes to defining wellbeing in the workplace.

5. The role of the employer in employee mental health and wellbeing

Overwhelmingly, employers are recognising their responsibility to support employees with their wider wellbeing and specifically, their mental health. 83 per cent of respondents have policies and procedures in place to specifically support mental health and wellbeing in the workplace. Just as employee assistance programmes feature in the top benefits reported by companies, this is also the top mental health and wellbeing initiative in the workplace. This is followed by 92 per cent providing flexible working and 86 per cent offering access to counselling services. It is important to note the opportunity for mental health and wellbeing initiatives to work hand in hand and effect long-term cultural awareness and change.

Respondents reported workplace stigma and perceptions as the top challenge to managing mental health and wellbeing. Furthermore, return on investment was frequently cited as a barrier to overcome when requesting resource in this area; however, 82 per cent cited a lack of clarity over how to measure success as a challenge. When asked if respondents had a dedicated budget for mental health and wellbeing programmes in their business, 55 per cent said no. When it comes to implementing employee mental health initiatives, employers cited the biggest pressures as time, cost and resources. Communication and awareness is crucial in managing the successful support of individuals who need to know that help is available.

Thank you...

We would like to thank all participants in our autumn survey and those of you who have recommended the survey to others. We continue to build the survey as an authoritative source of information, trends and insights into the world of reward.

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