Tracking reward matters in interesting times
By Peter Brown — We first ran the Paydata UK Reward Management Survey back in January 2009 in response to the global financial crisis and because our customers kept asking us what was happening as they struggled to come to terms with the new economic landscape.
Back then, the main interest was whether or not organisations were planning a pay review and if they were, how much were they budgeting. Despite a fairly gloomy economic outlook, more than three-quarters of the 60 organisations that took part were expecting a review; typically these would be in the 2-3% range.
There was some caution—a third of employers expected to postpone their reviews. At the same time, training and development, as well as other discretionary budgets, were suffering heavy cuts. Inflation was running at 3.2%, and employers were afraid of losing ground on pay and becoming uncompetitive.
Looking back, the recession ended up relatively redundancy-light, although it may not have felt that way at the time. In turn, that made the recovery slow and gradual. Pay rises stayed modest, employment fairly high and productivity stubbornly low. And latterly along came Brexit to stoke the uncertainty.
Fast forward to our latest survey in October 2016 and the picture is familiar. Some confidence has returned but caution is still the watchword. Pay awards have been glacially slow to change. They typically sit at 2.0%. Inflation is forecast to rise through 2017 from its current low of around 1%.
Our survey has evolved in the intervening seven years. We now run it twice a year timed to mesh with pay review and budget setting cycles of most of our customers. Its growth mirrors the growth in our customer base and also reflects the continued interest in the subject. Typical response levels have more than doubled. The profile of customers has changed somewhat. We still have a solid core in sectors such as construction and business services, but we’ve added professional institutes and associations, housing associations, production and manufacturing amongst others.
We’ve also taken the opportunity to look at additional areas where our customers have questions and concerns. It hasn’t been difficult to find topics; the main problem has been limiting them so that the survey stays manageable for respondents and still takes just a few minutes to complete.
Bonuses now have their own section in the survey showing the variations by organisational level as well as the considerable differences in practice between sectors. There is a section on recruitment and retention reflecting employers’ concerns on attracting and retaining talent. Results reinforce that view that London and the South East are still the key hot spots and also show the large variations between the types of role at risk.
Earlier last year, a special edition probed reactions to the Brexit result. In the latest edition there’s still a significant proportion of people who haven’t yet formed a definitive view on that one – hardly surprising whilst the detail is far from clear.
Two current topics we’ve included are the National Living Wage (NLW) and gender pay reporting. In the case of NLW organisations are looking to mitigate the resultant increased costs by increasing productivity and restructuring base pay but the survey results indicate they’ll increasingly look to pass the cost on to customers in the medium term.
Gender pay reporting is something that many organisations have yet to fully prepare for. The majority indicated that they’re still planning and some have yet to start. Good communications are seen as vital. So far, few are troubled by the potential need for corrective action to deal with any problems their analysis throws up.
A future edition may well look at another cause célèbre of Theresa May’s government – the fairness or otherwise of chief executives’ pay. Like gender pay reporting, that issue looks set to give rise to a new set of concerns and questions.
Back in 2009 we noted that employers were “trying to balance caution with pragmatism”. In 2017 that has become the new status quo. As someone once said with more than a hint of irony, “May you live in interesting times”. That should keep our survey going for a while longer…
Peter Brown is Senior Consultant, Paydata