Emerging Trends from our Spring UK Reward Management Survey 2024

Our UK Reward Management Survey for spring 2024 is currently live. Our survey has been running for 15 years and is designed to keep you informed about what is happening in the world of reward management across the UK.

As well as covering the pay and bonus outlook for 2024, this edition also tracks current practice and concerns on topical issues impacting employers right now including managing employee performance and productivity; flexible/hybrid working practices; recruitment and retention challenges; and absence and labour turnover figures.

Here we outline the five key emerging trends from the results from our survey so far.

1.????? Pay review budgets

With April remaining the most popular month to make pay awards, many employers will have already made decisions around pay for 2024. The median pay review for 2023 was five per cent; and for those affected by the National Living Wage (NLW), this is staying around the five per cent mark. For employers who are unaffected by the rise, the median is around four per cent, reflecting how the NLW equates to a median additional increase on the pay bill of just over one per cent.

We also explore whether the cost of living continues to shape pay awards. Even though inflation has fallen below five per cent, in line with government targets, employers and employees continue to face rising costs. Pay reviews are decided across the board for the majority of employers, reflecting a sense of all staff continuing to weather escalating costs. However, fewer anticipate paying a lump sum in 2024 to specifically address these challenges.

Bonuses are set to stay the same for the majority of respondent employers, out of the two thirds who operate a bonus scheme. Three quarters of employers set their bonuses based on a combination of factors including individual, team and company performance, with only one quarter basing this solely on company outcomes.

2.????? Performance and productivity

Many employers have implemented record pay increases in the last two years, alongside experiencing significant cost increases in other areas. Some employers are shifting their focus towards encouraging and rewarding employee performance and productivity. The survey explores how employers are approaching this.

Around half of respondents so far have said that they have, or are considering, adjusting their reward strategy to place a greater emphasis on performance and productivity. This indicates the greater focus on linking pay and performance as a way of balancing affordability and maximising profit for the direct benefit of employees.

Line managers will remain key to effectively implementing these changes in order to truly drive productivity while maintaining employee engagement. When discussing productivity, managers must ensure that this is positioned as a conversation around how to drive efficiency and deliver optimum value for the business, while not adding undue stress or undermining wellbeing initiatives that the organisation want to support. A delicate conversation to facilitate.

3.????? Flexible and hybrid working arrangements

The majority of respondent employers so far have a formal policy in place to determine the arrangements around hybrid and flexible working. For many employers, knowing how to navigate the system of flexible and hybrid working following the pandemic has been a challenge.

For those who prioritise their commitment to diversity, equity and inclusion, getting this balance right has been essential. Just over half are offering informal flexibility, in the form of ad hoc changes of hours or location, helping their employees to balance their workload and diaries. This requires employers to place trust in their employees to deliver the work.

The challenge to ongoing remote based working is the effect this has on younger generations in particular, who often learn by osmosis. With fewer chances to shadow in person, and for teams as a whole, with reduced chance encounters in shared office spaces to chat generally, the effect on culture is an important consideration. With one in 10 employers only expecting the majority of their workforce to be on site one day a week, employees and managers must be more intentional about the atmosphere and working arrangements that help build cohesive teams.

4.????? Recruitment and retention

Respondent employers are evenly split in their assessment of retention challenges in the year ahead. However, over half of respondents have experienced recruitment challenges and expect these challenges to continue in 2024.

Around half of employers indicate that they have had to offer salaries to new recruits that conflict with those paid to existing employees. This demonstrates how higher salaries are being used as a recruitment tool, with one fifth having to offer up to 20 per cent more.

Around half of employers expect employee turnover to stay the same in the next 12 months. The labour market has stalled since the buoyancy seen during the ‘Great resignation’, often seen as an after-shock of the pandemic where labour turnover was relatively flat as uncertainty reined. With political uncertainty ahead of the general election and costs remaining inflated, moving roles during 2024 will require greater incentives in return for individuals compromising their job security.?

5.????? HR budgets and agendas

We also explore the average absences for employees in the previous 12 months and identify employers’ views on the priorities for the year ahead. Absences have increased slightly from a median of 3.7 days in 2023, to four days in 2024. The effect of long-term ill health has made the headlines recently, with many employers asking how they can best support their staff who are affected.

October is the most popular time to set HR budgets for the year ahead amongst the respondents so far. Employee opinion surveys are a key priority for respondents, to drive down employee retention and understand what elements of total reward strategies are working and easily identify what could be tweaked.

Pay benchmarking and looking at the pay review process are the next most popular priorities for HR agendas in the year ahead. This reflects how getting internal processes right is essential for attracting and retaining the right talent in organisations. People want to know that they are being paid fairly, and competitively in the market or sector, and this is where benchmarking is essential. An objective process can take any issues of pay off of the table. The pay review process can be a monumental task, so ensuring that the most efficient process is in place is invaluable to optimise the resources of HR.

Have your say today

The spring UK Reward Management Survey remains open – the whole survey takes around 15 minutes to complete. In return, all participants will receive a free report of the results when they are published. We understand that some of the information we are asking for may be commercially sensitive. Therefore, we will never share confidential information with anyone else; and we will only produce a summary report of the results, which makes it impossible to identify individual answers.