2023/24 All Employee Reward Intelligence Survey

The challenge facing organisations is the balance between offering competitive packages and commercial viability, given the ongoing scarcity of talent and increased people costs.

The macroeconomic conditions present a challenging backdrop. There has been some easing of cost of living pressures but inflation levels appear a bit sticky. In this context, companies are continuing to combat talent scarcity and challenges around competitiveness in both local and international markets. Organisations are having to make considered reward decisions which support both talent attraction and retention, whilst managing cost pressures.

The survey asked participants what reward activities are currently being undertaken or prioritised, with results shown to the right. This shows that organisations are competing for talent and skills by reimagining their approach to reward, for example through pay competitiveness reviews, modification to job architecture and progression frameworks, and changes to incentives. Over the longer term, companies are considering other aspects of their approach to the broader people value proposition (PVP) with a focus on non-financial benefits to manage people costs.

Based on the findings of our survey, workforce salary increases for 2024 are expected to be in the range 4-6%. With employees expecting more and more from their reward offering, it’s important for organisations to ensure their overall pay and reward frameworks allow them to compete for the talent they need.

Employee expectations are changing to have increased focus on purpose and the wider-employee offering, however financial reward remains a key area for investment. With many organisations facing increased costs, this investment is having to take the form of more targeted interventions.

Competitive salaries and offerings are having an impact on an organisation’s people cost, which is focusing the attention of many organisations to review other areas outside of financial reward.

One key area for organisations is a review of their current non-financial benefits offering (54% of respondents). By identifying what employees value most, in conjunction with the cost to the organisation, it is possible to streamline the benefits offering to maximise return on investment. This is often leading to a focus on areas outside of financial reward.

For organisations with a highly specialised workforce, many have seen significant cost increases due to an ever increasing war on talent. This has resulted in many organisations (38% of respondents) are looking at differentiated pay strategies for certain populations.

With pay and reward having been the focus of recent years due to the impact of the pandemic and subsequent cost of living crisis, organisations are now turning to more cost effective ways of enhancing their reward offering and PVP more broadly, in order to continue to attract and retain talent.

Organisations are looking to refresh their “signature moves” to enhance their wider offering to employees, with 54% of respondents reviewing their recognition schemes and 46% looking at career progression/pathways.

With fairness and equality also becoming an ever increasing focus, organisations are also looking to improve their broader PVP through review of flexible working policies (e.g. hybrid working and international remote working) and family care policies (e.g. parental leave, fertility support).

The use of technology in reward is an area that unsurprisingly is going up the agenda, although there remains a significant amount of uncertainty as to what this looks like in practice.

36% of respondents said that use of technology, HR systems and AI were on their top priority list.

When asked about the use of AI in the reward function, whilst 51% of respondents said they have not yet started thinking about this, 40% said they were doing some initial thinking about how AI could make processes and certain reward-related tasks more efficient, with a further 10% already employing AI-type approaches in reward management. This is one to watch in 2024 as organisations identify potential use cases from the compensation round to total reward statements.

A deep dive into reward priorities by sector shows that there is some variation - reflecting the unique characteristics and challenges of each industry.

The relative priorities for Industrials hint at a sector focusing on modernising - they're most likely to be prioritising reviewing HR systems, job architecture and performance management.

Companies in Technology, Media & Telecommunications are the most likely to focus on pay competitiveness, reviewing reward philosophy and pay for skills - likely symptomatic of the hotter talent market in this sector.

A high proportion of companies within Financial Services put 'Reviewing total reward philosophy/EVP' as a priority (more than twice the proportion of those in the Consumer sector). Consumer sector organisations are tackling the diverse talent market with a higher focus on reviewing reward for skills and the links between reward and workforce strategy.