| | According to Hay Group’s
Reward in 2010 report,
two thirds (65 per cent)
of HR professionals
anticipate an upturn in
business over the next
twelve months. Nearly
three fifths (57 per
cent) expect business
results to be on or
above targeted levels
for 2010. The upbeat
outlook is also
reflected in improving
predictions for pay and
bonuses.
However, the report
sounds a note of
caution: an overwhelming
94 per cent of
organisations agree that
the worst is not yet
over.
Claudia Canavesio,
reward expert at Hay
Group, comments: “We are
starting to see a
cautious but growing
optimism among UK
organisations, reflected
in a predicted recovery
in salaries and bonuses.
However, there remain
significant challenges
ahead.”
Reward in 2010 is
based on predictions
from HR and reward
professionals from
around 200 large
organisations in the
public and private
sectors, representing in
excess of 370,000
employees.
Salary forecasts
improving
The report provides
an early indication that
salary increases are
beginning to recover.
Nearly four fifths (79
per cent) of
organisations intend to
increase salaries over
the next 12 months –
compared to 57 per cent
that increased salaries
in 2009.
The median increase
forecast is 2 per cent -
an improvement on
predictions of just 1
per cent in March 2009.
Canavesio comments:
“Compared to previous
research, the findings
from our latest study
suggest greater
confidence and clarity
for 2010 among reward
professionals, who are
anticipating and
planning for change,
rather than employing a
laissez faire approach.”
Pay freezes ease
off
There are also signs
that the big pay freeze
is beginning to thaw.
Three quarters (75 per
cent) of organisations
that implemented salary
freezes in 2009 plan to
lift them within the
next 12 months.
Of those
organisations that froze
salaries in 2009, 23 per
cent are considering a
second freeze.
Bonuses bounce
back
A further positive | |
|
| | sign is the re-emergence
of performance pay and
bonuses. Nearly four
fifths (79 per cent) of
organisations are
intending to pay bonuses
over the next 12 months,
half (50 per cent) of
which are expected to be
on or above target.
Payouts will vary
markedly according to
industry sector- the
majority of FMCG and
retail organisations
plan to pay full bonuses
in 2010, while worse hit
sectors, such as
financial services and
manufacturing, are
anticipating below
target bonuses.
Sector view: a
polarised marketplace
Despite the overall
optimism, the report
reveals a divided UK
marketplace. While the
majority of sectors are
cautiously optimistic
about 2010 - FMCG and
retail in particular -
the manufacturing and
public sectors continue
to face challenging
times.
Manufacturing:
Over two thirds (69 per
cent) of manufacturers
expect to fall short of
business targets in
2010, while two fifths
(40 per cent) believe it
will take between 12 and
18 months to feel the
benefits of the upturn –
compared to just 20 per
cent of all respondents.
Public sector:
Public and
not-for-profit
organisations are even
more pessimistic, with
nearly three quarters
(71 per cent) not
expecting to benefit
from the upturn for more
than 18 months.
Median public sector
salary increases are
forecast to be just 1
per cent in 2010, in
contrast to 2 per cent
in April 2009. This is
in stark contrast to 2
per cent median
increases forecast for
the private sector this
year.
With substantial cuts
in public funding to
reduce the Budget
deficit expected,
certain departments will
feel the pressure of
cost constraints, in
contrast, those with
multi-year pay increase
deals in place (such as
uniformed services) are
likely to see those
contracts honoured.
FMCG/Retail: In
sharp contrast, 90 per
cent of retailers and 75
per cent of FMCG firms
expect business
performance to reach or
surpass target levels
this year.
Almost all FMCG
companies (95 per cent)
and a majority of
retailers (92 per cent)
will provide a salary
increase. Nearly three
fifths (57 per cent) of
FMCG firms that | |
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| | implemented pay freezes
in 2009 expect to lift
them within the next six
months.
Finance:
Short-term incentives
have – and will continue
to be – a hot topic for
the financial services
sector. Rather
unsurprisingly, these
are forecast to be below
target by nearly two
thirds (63 per cent) of
respondents. Very few (6
per cent) respondents
expect above target
incentives, as opposed
to 13 per cent of
organisations across all
sectors.
HR challenges for
2010
Employee engagement
and talent management
are seen by HR and
reward professionals as
the most significant
priorities for 2010 –
both are cited by almost
70 per cent of
respondents as a key
challenge.
Canavesio comments:
“With tighter reward
budgets, paying and
motivating employees,
particularly high
performers, is a
difficult task.
“It is important for
organisations to explore
the full breadth of the
reward spectrum -
offering a competitive
total reward package,
with a focus on
non-financial elements
such as career
development, work-life
balance and job security
are likely to maintain
engagement and talent.”
Impact on reward
practice
Over two thirds (68
per cent) of reward
professionals say they
have changed the way
they manage reward as a
result of the recession.
Although most have
retained overall policy,
they have taken the
opportunity to implement
efficiencies and revisit
existing HR programmes.
Perception of the
reward function is also
changing. In light of
pay freezes, reward is
reaching wider audiences
and the traditional
remit of the reward
professional is
expanding with many
organisations adopting a
more advanced and
creative approach to
compensation and
benefits.
Canavesio comments:
“It is important for
organisations to explore
the full breadth of the
reward spectrum -
offering a competitive
total reward package,
with a focus on
non-financial elements
such as career
development, work-life
balance and job security
are likely to maintain
engagement and talent.” | |
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