*A Survey has captured the highest levels of pay awards in over a decade. HR and Reward Professionals across 208 employers responded, with the trends representative of HR practices affecting nearly half a million employees.
Tim Kellett, Director at Paydata, explains the key findings: “We have been monitoring HR practices for over a decade through our survey. Pay levels have consistently tracked inflation at around 2 – 3%.
However, our spring survey reveals that those opting for higher pay levels are at an all-time high in the history of our UK Reward Management Survey. 37% will offer between 4 – 5% in 2023, closely followed by 33% who will offer over 5%, reflective of the sustained pressure of inflation.”
The cost of living crisis led to a third of employers paying a lump sum to support employees in 2022, paying a median amount of £750. 15% have already decided to pay a lump sum in 2023, while 14% are considering doing so, with the median of £550 noted. Tim says: “Fewer employers are set to offer a lump sum payment, and those that are will offer a lower amount; this indicates hope that the cost of living crisis will start to abate over the next few months.”
A shortage of skills is driving the war for talent. Tim says: “With 64% reporting retention challenges and 74% experiencing recruitment challenges recently, new recruits can increasingly command a premium. 59% quote the need to offer higher salaries that conflict with those paid to existing staff.
Out of cycle pay awards, excluding those used to address promotions, are also increasingly being used as a retention tool to adjust pay, with 82% using these types of awards. This raises the importance of taking a holistic approach to reward decisions, to avoid pay parity issues further down the line.”
The bi-annual survey provides HR professionals with insights and statistics into current pay, reward and benefits. Data for the survey was collected throughout March, April and May 2023.
The usual patterns emerge for bonuses, with senior roles attracting bigger bonuses. However, organisations are facing greater scrutiny over the level of bonuses available to directors. Actual or expected median bonuses for main board directors have reduced from 41 – 45% in spring 2022 to 26 – 30% in spring 2023. Companies may be factoring in the CEO pay reporting requirements as more look to carry out executive benchmarking.
Employers’ top three priorities for the year ahead include pay benchmarking (74%), employee opinion surveys (72%) and benefits benchmarking (68%), all of which help to design an evidence-based total reward strategy that attracts and retains the right talent. Opinion surveys are an effective way of learning directly from employees about the true value that they derive from their reward package.
With recruitment and retention challenges remaining widespread, employers are striving to provide better support to employees to drive down employee turnover. Tim adds: “By offering greater support, clear development opportunities and aligning with their values by understanding what matters to employees, businesses can build a sustainable culture that people want to stay and join.”
*Paydata’s spring 2023 UK Reward Management
