Four key issues at the top of HR agendas for 2019

Brexit: the great unknown

Despite the current political turbulence, business optimism remains steady. However, the results from our autumn edition of the UK Reward Management Survey 2018 were more cautious than projections from the spring edition. 54 per cent of respondents expect revenues to increase, a slight reduction from the 60 per cent in spring. Next week, we will examine the impact on resourcing that Brexit is having and how businesses need to prepare now for the recruitment and retention difficulties that Brexit may exacerbate. We will also be exploring in depth over the coming weeks about how pay practices are being shaped by numerous factors including Brexit and testing the validity of the headline year on year pay increase figures.

The increasing importance of benefits

Data from the UK Reward Management Survey highlighted the frequency of HR reviewing the benefits package on offer. Whilst an annual review is commonplace for reviewing private medical providers and the like, from speaking with customers, there is also a suggestion that they review and refine the other benefits on offer to employees annually, as a key tool in recruitment and retention. At Paydata, we have always stressed that pay is a hygiene factor – a holistic focus on reward and benefits generates a more rounded picture of employee satisfaction.

The traditional 'cash is king' emphasis of benefits is being gradually replaced by a range of new and innovative benefits. These include flexible working and a greater focus on wellbeing both internally, with a focus on employee mental, physical and financial health, and externally, with a social focus provided by volunteering opportunities. 75 per cent of respondents to our UK Reward Management Survey said that defining voluntary and flexible benefits to suit their culture features among the current key challenges they are hoping to tackle in 2019. In certain sectors, particularly in construction, these also include involvement in specific, high profile projects to bolster CVs, illustrating the widening definition of what constitutes employee benefits.

Long Term Incentive Plans

These incentive plans have seen a surge in popularity in recent months with our customers looking to reward long-term success. Given the fact that benefits are increasingly focused on flexibility and alignment with employees’ values, it will be interesting to see if they remain popular in 10-20 years. Younger generations are increasingly challenging the status quo in terms of the legacy they hope to leave. Generally, loyalty no longer equates to greater pay packets, with data from the autumn UK Reward Management Survey indicating those who moved roles could reach higher levels of pay more easily than those who stayed; 72 per cent offered up to 10 per cent more to new employees.

Data from the UK Reward Management Survey indicated that of those who offer LTIPs, 100 per cent offer them to Main Board Directors and 86 per cent also offer them to other directors and senior executives, whilst 17 per cent offer them to function heads and senior managers, illustrating the focus of this type of benefit. The changing face of the workplace and a less hierarchical structure may see the future decline of LTIPs as an engagement tool, but these figure show that, for now, they remain popular amongst more senior levels of roles. Of course, with senior level roles traditionally being held by older generations, as the younger generations grow, there may well remain a place for LTIPs, as the priorities and motivations of individuals naturally develop.

Fair pay: the role of Equal Pay Studies and the CEO Pay Ratio Regulations

Whilst legislation around the gender pay gap has driven those publishing data externally from three per cent in 2016 to 74 per cent in 2018, 57 per cent are actively examining the drivers behind their figures. Employee Benefits featured the results from our autumn UK Reward Management Survey, which highlighted how organisations are conducting additional analysis. Diversity is also coming to the fore, with the benefits of greater diversity in terms of accessing a wider pool of talent and experience starting to impact diversity policies across organisations. 71 per cent report that conducting an equal pay study features at the top of their HR agendas for 2019.

For listed companies, 2019 will also see the CEO Pay Regulations come into effect; aside from the calculation itself, companies must be mindful of this approaching snapshot of their business and the required narrative to explain this to key stakeholders.