Four out of ten UK Organisations are to increase reward differential for top performers

According to the preliminary results of its first annual UK Compensation Trends Survey,run jointly with Curo Compensation and Digby Morgan, the survey sought to identify the key compensation management issues facing organisations in 2012. The results are undoubtedly thought-provoking. Concern about economic turmoil seems likely to continue well into 2012. Yet the focus of the HR directors and compensation professionals surveyed is moving away from cost control. In fact, the top priority for the coming year is the alignment of reward (salary increases and bonuses) and individual/business unit performance. Effective engagement of employees, both directly and through line management is a close second.

The results highlight some real challenges for employers. Compensation is widely perceived as not sufficiently engaging for employees, most likely a reflection of recent austerity. Respondents also pointed to a need for greater alignment of salary and bonus awards with individual and business unit performance. Over 40 percent of the companies surveyed intended to increase the differential in pay awards between top performers and the rest of the organisation.

This combination of priorities suggests that whilst investment in compensation is recognised as necessary, there is much more scrutiny being applied to how this is being allocated. The pressure is therefore on HR and Reward professionals to maximise the impact of this investment, with effective policy definition followed by clear and transparent implementation processes resulting in a defendable and fair allocation of budgets. Effective compensation management is critical, yet 62 percent of survey participants do not believe the technology they currently use is flexible enough to meet their needs. A further 55 percent believe the administration of their existing process is too onerous, with any move towards additional performance alignment likely to exacerbate this.

Gerry O’Neill, CEO of Curo Compensation commented: “The survey results clearly demonstrate that a window of opportunity exists for HR to ensure absolute alignment of compensation decisions with individual performance. By focussing on the way compensation processes are managed, and implemented, HR can effectively operate within budget limits, ensure fairness of recommendations resulting in both talent retention and engagement.”