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UK Reward Management Survey highlights top HR challenges for 2020

Tim Kellett, Director - Paydata

Insights into the world of reward and benefits
The 2020 autumn 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. We feature statistics on pay, bonuses and employee turnover in addition to employers’ expectations around the ongoing impact of coronavirus on business operations.

Data was collected between September and October 2020 from 204 HR and Finance Directors and Reward and Compensation Specialists, representing HR practices that affect half a million employees.

Survey Highlights
Tim Kellett, Director at Paydata explains the key findings: “Extraordinary challenges continue to face employers who have needed to remain agile since March of this year. In a year defined by the pandemic, our autumn 2020 UK Reward Management Survey has identified the key challenges that continue to face employers.

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. A significant number of pay awards (up to 53 per cent) were largely already agreed and being implemented before Covid-19, with 34 per cent offering between two and three per cent and 32 per cent offering between one and two per cent; most proceeded as planned.

However, one quarter are operating pay freezes, in contrast to three per cent operating a pay freeze in autumn 2019, showing their rising prevalence over 2020. A greater impact on pay awards is predicted in 2021, when pay budgets will no longer be eased by the furlough scheme. 56 per cent already predict pay rises of one to two per cent, a return to the cautious levels seen following the last recession.

Where pay reviews have been granted, 32 per cent of employers granted an across the board increase, perhaps reflecting the sense that everyone is in this together. Some customers have reported senior management taking pay cuts and forgoing bonuses, enabling employers to provide greater financial support to those paid less in their organisation.

The conditions for it to be an employer’s market are in place, with just one in five employers anticipating difficulties in retaining and recruiting people. 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.

In order to weather the storm, 41 per cent redeployed employees to other areas of the business to retain key talent and avoid making job cuts. 39 per cent made redundancies or restructured as a result, whilst 56 per cent have utilised the Coronavirus Job Retention Scheme.

90 per cent of employers have policies and procedures in place to support employees through the extraordinary times we are living in. Employee Assistance Programmes, access to counselling and flexible working were the top strategies employers are offering to address and accommodate the pressures felt by employees. Many noted that sickness days have decreased, with the ability of many to work from the comfort of their own home; only one third of respondents have reviewed their absence policy as a result of Covid-19.

Overcoming the risk of fatigue from a sustained hiatus from the workplace is a key challenge facing many employers. Those on the frontline are alert to the long-term impact on mental health and wellbeing, saying that they anticipate an aftershock effect from the pandemic as employees focus on the job at hand and dealing with the virus’ far-reaching effects on society. Senior management communications have been a key tool to drive employee engagement as organisations seek to retain key skills.

When predicting what life looks like post-pandemic, the biggest proportion (25 per cent of respondents) reported that to date, only between one and five per cent of employees had returned to the office. Even by August 2021, only 39 per cent of employers expect 100 per cent of their staff back in the office. However, whilst only one in five employers think that fully remote roles will become the norm, 14 per cent have made the decision to reduce the office space they currently hold. This reflects the fact that 86 per cent continue to encourage home-working and 70 per cent operate a booking system to limit capacity.”

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