PAY DATA
Prospects for pay in 2012 - Hay Group
UK workers will face a further squeeze in real pay this year, as organisations cut costs in the face of continuing economic uncertainty, according to Hay Group. The Hay Group report, Reward in 2012, is based on forecast data from reward professionals in 182 organisations, representing over half a million UK employees.
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Business confidence under strain
Pay forecasts for 2012 reflect “faltering confidence amongst UK businesses,” says Hay Group:
Two-thirds of respondents state that the worst of the recession is not over for their organisation.
Only 7% believe the worst of the crisis is over.
Almost a third expect to miss performance targets this year.
Organisations are keeping a tight rein on pay increases as a result – leading to concerns over the impact on workforce morale:
As many as 43% of organisations report pressure to decrease pay in order to control costs.
Despite this, the vast majority (85%) of organisations actually plan to increase pay in 2012 – but at “a rate well behind inflation”.
Three-quarters (75%) of private sector organisations, and some 90% of public sector organisations, will increase pay – by a median of 2.8%.
Over a fifth (21%) of private sector organisations implemented freezes in 2011. This year, as many as 58% anticipate lifting these.
Over half (51%) of respondents agree that uncertainty around pay has resulted in a downturn in employee engagement.
Adam Burden, Reward Information Consultant at Hay Group said: “As ongoing instability hits business confidence, a continued squeeze on pay is inevitable. Our research reveals the demoralising effect pay uncertainty is having on employee morale.”
Bonuses rolled back
Falling business confidence is also affecting the prospects for bonus pay-outs in the coming year.
In 2011, almost three-quarters (73%) of organisations with bonus plans forecast payments to be on or above target.
This year, the proportion has fallen to 60%.
Sector Focus
Public Sector – “a year of change”
Where pay rises will be implemented, they will be restricted to a median of 1.5%.
Half of organisations believe that cost control will damage their ability to retain key talent.
Burden said: “The public sector is facing a tough 2012. Public organisations need to design reward structures that incentivise the individual, drive operational results yet continue to ensure affordability and control.”
Retail – “confidence throughout the retail sector is low”
A third (33%) of retailers plan to implement pay freezes in 2012.
The remainder plan to increase salaries at a rate below inflation – a median of 2%.
This is down on 2011, when all retailers planned to increase salaries and forecasted a median pay rise of 2.5%.
Financial services – “negative shift in business sentiment”
Whilst all organisations planned to increase salaries in 2011, this drops to 88% for the coming year.
Those increasing pay are planning a median increase of 2.5%.
Of those organisations that operate a bonus scheme, 44% will pay below target.
A final word
“Organisations must take an open and transparent approach to pay to ensure that productivity doesn’t suffer. Engaging employees and communicating reward policy will be key to maintaining motivation during the difficult year ahead.” - Adam Burden, Reward Information Consultant at Hay Group.
Want to know more?
Title: Reward in 2012, Hay Group, February 2012.
Survey sample: The survey summarises information provided by HR and reward professionals in 182 organisations – 146 from the private sector and 36 from the public sector – who participated in an online survey. Typical respondents included HR and reward professionals from medium to large size organisations across all major industries, representing over half a million employees.
Availability: Contact Hay Group in London, tel: 020 7856 7000.
Hay Group’s PayNet remuneration databases have over 12 million individual records from more than 13,000 organisations.
Hay Group is a “global consulting firm that works with leaders to turn strategies into reality”. With 85 offices in 49 countries, it works with over 7,000 clients across the world. For more information, visit: www.haygroup.com.