Our latest reward management survey focuses on the impact that COVID-19 and the ensuing economic turmoil have had on reward practices in the UK. The survey asks whether global events and resulting trends have forced organisations to revisit their reward policies on, for example, matters like employee financial wellbeing. The report examines the motivations behind these changes in reward, the barriers encountered along the way, and includes recommendations for practitioners who plan to update their polices in 2021.
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We’ve grouped the report into six relevant themes. Click on the appropriate theme to download that particular section of the report:
Summary of findings
The coronavirus pandemic has imposed significant limitations on business activity, impacting employers’ pay decisions in 2020 and forecasts for 2021, with predominant trends being pay freezes and the deferral of pay decisions. However, while last year’s pay actions affected employees across the board, in 2021 they’re more likely to be targeted at a proportion of the workforce.
Strikingly, our survey found that half of those employers surveyed (49%) do not have a financial wellbeing policy in place. As income providers, organisations play a vital role in their workers’ financial wellbeing; failing to implement a policy not only impacts employees’ health and wellbeing, but also their work performance due to ongoing money concerns. Fortunately, the financial hardship wrought by COVID-19 has inspired more employers to introduce employee financial wellbeing policies, with 12% either introducing – or planning to introduce – a policy in direct response to the pandemic, while 24% are investigating its impact on employees’ financial wellbeing so that they can identify the right kind of support.
Though some organisations were quick to seek Living Wage accreditation due to concerns surrounding the financial repercussions of the pandemic, most of those signing up weren’t influenced by the public health emergency, but instead by the key benefits accreditation brings, including improved employer and customer brands and employee engagement.
Our findings also indicate that employers are increasingly considering ways in which they can make their reward decisions fairer. The Black Lives Matter (BLM) movement has reignited interest in inclusivity, encouraging some employers to confront their reward schemes, policies and practices in a bid to create diverse and inclusive workplaces.
Worryingly, in some cases, senior management attitudes have hindered progress on both of these fronts. Though some senior leaders might not view financial wellbeing as a priority now, others may feel there’s simply no need to respond to BLM, since the organisation’s reward processes and outcomes have already been reviewed and judged to be fair.
Implications for reward and people professionals
The most successful reward strategies strike a balance between supporting the organisation’s changing business priorities while echoing its vision, purpose and people. Get it wrong, and the cost will outweigh the benefits.
Whether the motivation is to avoid risks or seize opportunities, there are several things practitioners can do to help employers successfully adapt their reward approach:
- Establish an appropriate reward design by collecting, analysing and interpreting the people and business data available. Then, explore and test the available options in various scenarios before applying project management skills, such as time management and budgeting.
- To achieve effective change and gain buy-in, encourage stakeholders (like employees and line managers) to offer feedback on the new reward approach. When communicating any changes to the wider business, make sure you act with sensitivity, acknowledge those most affected, and explain your reasons for implementing change, as well as the steps taken to draw such conclusions. To ensure the process is handled sensitively, apply your listening, negotiation and diplomacy skills to safeguard employees who might otherwise resist change.
- Encourage your employer to invest in the technologies and training required to manage reward changes effectively. To implement sustainable change, you’ll need the right technology to gather data and the necessary soft skills to manage interactions with employees across the board. Although the rise in homeworkers has increased investment in emerging technologies, there’s less evidence showing similar investment in soft skills, such as listening.
- To reap the benefits and avoid the risks associated with change, consider where your strengths and weaknesses lie. If you lack the expertise required, you may be able to build it in-house, borrow it from other departments (from a marketing team, for example) or external bodies (such as the Money and Pensions Service), or buy it from advisers or providers.
About the research
The research took place between September and October 2020, with 420 reward professionals responding to the survey on behalf of their employers. Responses came from the private, public and voluntary sectors, from small, medium, large and very large organisations. Survey responses were complemented by workshops with expert practitioners, to delve into the stories behind the numbers. Further details are available in the appendix.
This report was researched and written by Charles Cotton, Senior Policy Adviser for Reward, CIPD; Liz Marriott, Data Analysis Consultant; and Stephen J. Perkins, Global Policy Institute, London and Professor Emeritus at London Metropolitan University.
We particularly acknowledge assistance from the following workshop participants: Kelly Bol, Neal Blackshire, Lucy Carr, Paula Evans, Steve Hammond, Brigid Miles, Colin Miller, Karen Pearce, Carol Richardson, Hazel Robinson, and Greg Rochester.
Thanks also go to all the professionals who invested their time helping to inform the questionnaire, its completion and this survey report.
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