Current labour market conditions and inflationary expectations are causing companies to make changes to their reward programmes, according to WTW’s Inflation and Reward actions pulse survey.
The most frequent changes including increasing current salary budgets, paying higher salaries on a targeted basis, paying employees more frequently and placing more emphasis on non-financial elements of compensation.
The research found that 88 percent of organisations are hiring people at the high end of the relevant salary range.
Also, 54 percent are offering sign-on bonuses and over half (51%) are offering retention bonuses.
While some organisations are offering or are planning to offer spot bonuses (49%), one-off cash payments (37%) and Off-cycle LTI awards or equity or share based compensation (31%).
Plus, 83 percent of companies are offering increased workplace flexibility, 57 percent are offering increased use of training opportunities and a third are using spot rewards.
“Companies are taking measures to fight to attract and keep talent in the workforce, but we need to be evaluating the longer-term outcomes of these actions. Offers need to be realistic and consider potential internal equity concerns, particularly between new hires and longer serving employees,” highlights work and rewards expert, Alasdair Wood.
Salary increases
More than three quarters of companies are budgeting salary increases to try and drive better staff retention rates.
However, the pressures of rapidly rising inflation are also acting as a prime motive for increased salary budgets, with 73 percent of organisations citing this as a key factor.
Companies that are looking to adjust salary ranges for employees are typically adjusting them by 3.1 percent to 7.5 percent.
Three in five organisations have increased recruitment efforts since the start of the year. Organisations are experiencing problems attracting and retaining talent with digital skills (77%), non-management professionals (63%), salaried employees (57%) and employees in sales positions (49%).
What other changes have organisations made?
In response to these challenges, organisations are rethinking pay structure, as two-thirds of companies planning on making more frequent salary adjustments will do so for targeted groups, with a focus on employees who are retention risks (71%), colleagues with rare/hot (68%) or digital skills (54%) and the lowest paid or highest performing workers (54%).
Organisations that are planning on making salary adjustments are most likely to do so twice a year or on a as needed basis.
In addition, almost a quarter of companies (23%) have introduced new retention programmes, while nearly a third of organisations (32%) are planning or considering introducing these programmes. Retention programmes are most commonly targeted to key groups, including retention risks and employees with rare or hot skills.
Companies are also looking to promote existing benefits, with almost two-thirds of organisations promoting money saving benefits such as discount schemes and over half of companies promoting financial wellbeing and education benefits or opportunities to enhance upskilling or learning and development.
What more should organisations be doing?
Alasdair Wood, work and rewards expert offers some advice: “As companies test different approaches in response to the current environment, there will undoubtedly be some teething problems. In order to adapt and thrive we recommend that companies define their priorities and the strategic approach they’d like to take in advance – agreeing what they want “to be known for”.
“This will include pay, but it should also consider non-monetary rewards as well as career and skills development. A well thought through strategy will aid decision making on the more tactical responses that will inevitably also be necessary.
“And critically, companies will need to evaluate their business priorities to identify where longer-term funding will come from because it’s likely that issues surrounding recruitment and inflation will extend well into 2023 and possibly beyond.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
- Amelia Brand
- Amelia Brand
- Amelia Brand
- Amelia Brand
