Top five reward trends revealed


The 2020 spring edition of Paydata’s bi-annual UK Reward Management Report provides HR professionals with insights into current trends in the world of reward and benefits. Paydata captured statistics on pay, bonuses and employee turnover in addition to employers’ expectations around the impact of the coronavirus outbreak and their current practices in relation to diversity and inclusion.

Data was collected between March and May 2020 from 170 HR, Reward and Finance professionals that have contributed insights into HR practices that affect nearly half a million employees. Here Paydata outlines the five key trends that have emerged.

Employers are assessing what the ‘new normal’ means for their operations

Employers have had to address profound challenges since March of this year. Enforced changes to people’s roles have seen many employers try to make the best of the new situation. The most profound impact has been on the ability of respondents to operate business as usual, with 49 per cent expecting this to decrease. Respondents noted the range of efforts being made ahead of lockdown to put in place ‘new ways of working’ to continue to deliver services during this period and minimise the impact on their ability to operate.

There were similar concerns when it comes to employee productivity, with 37 per cent of respondents anticipating that productivity will decrease. This is compounded by the fact that nurseries and schools have been closed, so working parents have had to juggle homeschooling and individuals have had to adapt overnight to managing work remotely. This widespread working from home experiment may lead to reduced office spaces and commuting as more people request the option to work flexibly in the long-term.

Pay practices

Assessing pay decisions right now is fraught with difficulty, with many job losses particularly in the hospitality and airline industry where remote working cannot be accommodated. Pay and bonuses are of huge importance amidst workers being furloughed and the executive board must be seen to be responsible with their own pay practices in the circumstances. Bonus levels are more conservative for 2020.

Since the last global recession of 2008, Paydata has observed a cautious level of pay increases, which have stayed around two per cent. Pay increases had buoyed to three per cent on average over the last couple of years, but respondents are now evenly split with 40 per cent offering two per cent and 42 per cent offering a three per cent increase. A significant number (up to 56 per cent) of pay awards were largely already agreed and being implemented before lockdown, therefore most have proceeded as planned. However, 12 per cent expect pay freezes over the next year.

Lowest levels of recruitment and retention challenges since 2008

One in five employers within the sector expect to have difficulties retaining and fewer than one in three anticipate challenges in recruiting people over the next 12 months. These are the lowest figures Paydata has captured in its reward surveys since the financial crisis in 2008 / 2009, signalling how employees value job security and how redundancies may increase the number of candidates applying for roles. Similarly, employers may now be more open to flexible working and be able to recruit from talent pools that do not necessarily want a set 9-5 role.

Paydata continues to monitor the use of out of cycle pay increases and notes that fewer respondents are using this type of pay increase to supplement pay awards, with only 67.3 per cent predicting their use in contrast to 87.5 per cent in 2019. Equally, fewer employers are paying a premium as a recruitment tool to incentivise individuals compared to last year, falling from 63 per cent in autumn 2019 to 48 per cent in spring 2020.

The actions of employers now will define them in years to come

The vast majority of employers have business continuity plans in place to deal with exceptional circumstances and the extraordinary times we are living through. Almost four out of every five employers have involved HR in formulating their response to COVID-19, indicating the crucial role of HR when it comes to managing talent and workforce planning that is at the heart of delivering business as usual for organisations.

HR believes that the current situation greatly influences how employees view their employer. Four in every five employers believe their employees are satisfied or very satisfied with their organisations’ response to COVID-19. Paydata anticipates that this will have a long-term effect on an organisation’s ability to retain employees once this crisis has passed and that they will be defined by the working relationship and support they offer individuals during these challenging times. Pay benchmarking, employee opinion surveys and pay review processes are the three top HR priorities identified for 2020, ensuring that employee engagement and key skills can be retained to minimise the long-term impact of the coronavirus outbreak.

Maintaining the momentum behind diversity

With the Black Lives Matter protests taking place across the UK and talk about discrimination being widespread, the emphasis behind equal treatment for those traditionally under-represented is a key concern for employers. Not only is there a business case for diversity in the workplace, but key stakeholders will scrutinise a business’ track record which can affect the ability to attract new employees, customers and investors who want to see organisations behaving ethically and inclusively.

In an effort to ease pressures on organisations, the government removed the obligation to publish the data for 2019/2020. However, many have already collated this data and intend to publish it later on in the year. Some intend to monitor their progress as part of a yearly audit of their practices in promoting diversity and inclusion. Companies are increasingly scrutinising the demographic of their workforces, specifically in relation to ethnicity, age and disability, with 76 per cent of organisations already offering diversity and inclusion initiatives.

Tim Kellett, Director at Paydata explains the key findings: “Employers have had to address extraordinary challenges since March of this year. Since the last global recession of 2008, Paydata has observed a cautious level of pay increases, which have stayed around two per cent. Pay increases had buoyed to three per cent on average over the last couple of years, but now we are seeing respondents are evenly split with 40 per cent offering two per cent and 42 per cent offering a three per cent increase.

A significant number of pay awards (up to 56 per cent) were largely already agreed and being implemented before COVID-19, therefore most have proceeded as planned. It will be interesting to see the impact the pandemic has on pay awards over the next twelve months, especially when pay budgets will not be eased by the furlough scheme and 52 per cent of businesses expect revenue to decrease.

One in five employers expect to have difficulties retaining and less than one in three anticipate challenges in recruiting people over the next 12 months. These are the lowest figures we have seen since the financial crisis in 2008 / 2009 and therefore fewer respondents are paying a premium and granting out of cycle pay awards to incentivise individuals compared to last year.

HR believes that the current situation greatly influences how employees view their employer. 9 in every 10 employers believe their employees are satisfied or very satisfied with their organisations’ response to COVID-19. We anticipate that this will have a long-term effect on an organisation’s ability to retain employees once this crisis has passed and that they will be defined by the working relationship and support they offer individuals during these challenging times.

Almost every employer has involved HR in formulating their response to COVID-19, indicating the crucial role of HR when it comes to managing talent and workforce planning that is at the heart of delivering business as usual for organisations. Whilst the government has sought to ease the pressure on HR departments by removing the obligation to publish gender pay gap data for 2019/20, many still intend to publish their figures and maintain the momentum behind closing the gap. Similarly, the ethnicity pay gap is on the radar of 72 per cent of respondents and we welcomed reports of varied initiatives to drive diversity in the workplace, with 76 per cent of employers having these in place.

Pay benchmarking, employee opinion surveys and pay review processes are the three top HR priorities identified over 2020, to ensure that employee engagement and key skills can be retained to minimise the long-term impact of the coronavirus outbreak.”



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