Top five trends in UK reward management right now

1. Business optimism remains cautious as Brexit remains an unknown

Brexit lacks clarity as the deadline to leave has been extended until 31 October 2019 and a leadership contest is in full swing. Business optimism remains steady during this period of political turbulence, with the results echoing the cautious projections captured in our autumn edition. 57 per cent of respondents expect revenues to increase, whilst 50 per cent expect profitability to increase. One fifth felt it is too early to tell.

2. Pay awards officially increase alongside out of cycle pay awards

Up to three per cent pay increases remain most popular amongst respondents, after a decade of relatively flat wage growth. The two most quoted drivers for pay increases are external and internal relativities. We continue to monitor the practice of granting out of cycle pay increases as organisations increasingly use these to bridge the gap between official pay review figures and wider market pressures. 81 per cent used out of cycle pay increases in 2018, whilst only 48 per cent anticipated using these types of increase in our autumn report. 52 per cent cite market pressures and 42 per cent cite internal pay alignment as key drivers. This is a growing trend, as 83 per cent anticipate granting out of cycle pay increases in 2019.

3. Gender pay remains a key agenda item with incremental progress

Whilst 71 per cent of respondents measure the gender pay gap, progress remains slow. Whilst our autumn edition captured a median gender pay gap of 17.1 per cent with an interquartile range of 10.8 per cent and 26.2 per cent, these figures have marginally improved in our spring 2019 edition, at 16.3 per cent with an interquartile range of 8.8 per cent and 24.7 per cent. However, the reporting deadline has had a tremendous impact on the number of respondents required to look at their figures and consider how to act upon this, with those publishing their data externally rising from three per cent in 2016 to 69 per cent in 2019.

4. Equality and diversity initiatives effect cultural change

Nearly half of respondents are actively considering how they can tackle wider equality issues within their organisations, beyond discrete initiatives such as the reporting requirements regarding gender pay and potentially ethnicity pay gaps. Overwhelmingly, 86 per cent of employers offered equality and diversity initiatives. The most popular initiatives are designed for the short term to effect long-term changes to the workplace, with the top three being:

• Networking groups (designed to bring together under-represented groups to support their progression);
• Dedicated working groups (open to all employees to champion diversity within the workplace); and
• Coaching and sponsorship programmes (more individually focused to provide dedicated training and support).

5. Recruitment and retention challenges persist for employers

62 per cent expect retention issues to persist in the next 12 months, in contrast to 40 per cent in spring 2018. 66 per cent anticipate recruitment difficulties in the next 12 months. Two third of organisations have had to offer new recruits salaries that conflict with those paid to existing employees, with 69 per cent of respondents offering up to 10 per cent more. Employers increasingly have to be creative in their approach to reward and benefits to effectively attract and retain talent, as limited HR budgets persist. Pay benchmarking, employee opinion surveys and reviewing the pay review process featured high on HR agendas for the year ahead, suggesting that the focus is on managing employee engagement to drive down employee turnover levels.

With increasing pressure on HR teams to achieve more with less, teams have to think outside the box to meet increasing demands with constrained budgets that continue to dominate the HR landscape of 2019.

Thank you...

We would like to thank all participants in our spring survey and those of you who have recommended the survey to others as we continue to build the survey as an authoritative source of information, trends and insights into the world of reward.