HR and reward strategies 2025/6: ‘festina lente’ - act less, plan more

Blog posts

21 Oct 2025

Dr Duncan Brown, Principal Associate

Follow @duncanbHR

The economic context: stagnation, uncertainty

Business and HR leaders might feel that a recent admission by Chancellor Rachel Reeves that ‘for many the economy feels stuck’ in its continuing low productivity/low growth doldrums accurately characterises their position.

Even in the more productive US, ‘we’re in a low-hire, low-fire economy’ at the moment, according to Federal Reserve chair Jay Powell, with companies waiting to see ‘how it all shakes out’.  Employment there grew at an unusually low annualised rate of 0.5% in the three months to July, just ahead of the 0.4% average across the rest of the G7 economies.

Declining rates of new job growth is nothing new in the UK, and our CEO Naomi Clayton described last week’s ONS monthly update as ‘showing signs that the labour market is starting to stabilise’, after a two-year decline in new job openings.

The HR and reward response

Are those of us working in HR and reward management similarly adopting a ‘wait and see’ approach at the moment? Far from it – HR has been at the leading-edge of corporate strategic implementation in the 2020s, the boardroom’s leading Action (Wo)Man.

‘Rapid response’ pretty accurately describes HR’s untypically speedy and generally effective initiatives in response to the series of  ‘shocks’ and crises we have faced since Covid struck. ‘Responding fast and genuinely supporting people’ has been the priority, one senior HR participant told Brightmine’ s annual survey of HR plans and responsibilities in 2021; ‘HR are the heroes!’ according to another, somewhat surprised respondent.

This pattern of unusually rapid and effective responses, that started with HR taking the lead with safety and support arrangements for front-line workers and locked-down office/homeworkers, and implementation of furlough schemes, helps to explain the growing boardroom influence of HR leaders.

According to International Workplace Group’s latest survey of 500 UK CHROs, 88% said their influence was at an all-time high and 82% are working more closely with their board. Relatively immediate reward responses have been an integral part of this boardroom agenda, ranging from enhanced family friendly policies and mental health and financial wellbeing support tools, to a much wider use of golden hellos, retention payments and additional one-off bonuses, combatting skills shortages and the COL pressures on employees.

Stopping this breathless cycle of fast-action crisis-responses might appear to be counter-productive to the HR function’s influence. And in the reward sphere this year there appears to a somewhat schizophrenic pattern of action and inaction. We are seeing continuing innovations apparent in employee benefits, especially on the health and wellbeing side, but relatively low rates of change in pay management.

HR: acting (and innovating) fast…

79% of respondents in Benefex’s Reward and Benefits (2025) report increases in their total spending over the last year. This is fuelling the spread of comparatively new provisions that were accelerated during Covid, such as online GP consultations and counselling services, as well as the democratisation and harmonisation of benefits formerly provided largely as executive perks, such as Private Medical Insurance. Tesco, for example, has opened up access to its flexible benefits and extensive wellbeing provisions to all 300,000 employees.

On pay we are seeing a different, more ‘cautious approach’, illustrated in Brightmine’s data, with an average pay award across the UK private sector of 3% for the ninth consecutive month. According to Brightmine's Sheila Attwood, ‘many employers are continuing to approach pay decisions with caution’. In the CIPD’s Reward Management Survey just 14% had changed their pay structures in the last year and 61% said they had no plans to.

HR: thinking (and planning) slow

However. in both pay and benefits we are seeing welcome evidence of reward leaders pausing to reflect on their raft of recent changes and more clearly plan and prioritise for the future – reported by 22% of the participants in the CIPD Reward Survey.

This may be because of external uncertainty, but also due to internal issues. Common changes made since the pandemic to address immediate needs, such as paying recruitment bonuses or recruiting new employees higher up pay ranges, may have created serious equity problems. And how effective are all these rapidly-introduced new benefits?  The numbers measuring the ROI of benefits investments have more than doubled over the past 12 months in REBA Benefits Design Research 2025.

As my IES colleague Dan Lucy told the Charities HR Network Conference last week, strategic workforce planning in an uncertain world has to move away from ‘building a complex database’ and ‘waiting until you have the perfect data to produce the (one) perfect plan’ to ‘dialogue, asking the right questions’. Carrying out reward reviews and better workforce planning are two of the top five priorities for HR found in Brightmine’s latest annual survey of HR.

Thinking (and doing) fast and slow

Lack of immediate action in HR functions after five years of pretty frenzied, often external-crisis-driven activity, might be regarded as sensible in our current economic situation. This may be ‘flat’ and ‘frozen’ but is also highly uncertain. How can you operate performance pay mechanisms if you can’t forecast performance?  Will the UK be getting European-style pay transparency legislation or won’t it? A key question though is how wisely are HR and reward leaders using this spell of relative quietude in our weather and economic systems?

More of us are recognising the wisdom of psychologist Daniel Kahneman’s warning in the aftermath of the 2008 financial crisis of too much thinking and reacting ‘fast’ in our unpredictable world and not enough ‘thinking slow’. Kahneman’s bestseller ‘Thinking, Fast and Slow’ was very much a reassertion of the importance of the latter.

Many of IES’s HR Network members have already been thinking there is a need to step back after all this change; to assess individual HR and reward policy initiatives and how well they knit together; to integrate new practices more clearly within an overall strategy.

This is driving serious activity on total reward strategies – a priority for 60% of the 7,000 respondents in Korn Ferry’s Global Total Rewards Pulse Survey. It’s vital now to get more strategic and planned, but without losing that essential flexibility to respond in a variety of different ways, especially to the next unexpected ‘shock’. As Kahneman emphasised, we need both modes of thinking: you don’t want to spend hours developing a detailed analysis and plan when that sabre-tooth tiger attacks, or a global pandemic suddenly strikes. The Italians use a Latin phrase to describe it, ‘Festina lente’, or ‘make haste slowly’ (variously attributed to Augustus, Erasmus and many others).

Scaling back on rapid responses in HR functions, however sensible, should not mean inaction: that would be a mistake and a wasted opportunity. Dan Lucy even recommends we consider not using terms like ‘strategic workforce planning’  in order ‘to encourage a more discursive, implementation-focused process of conversation’ and re-direction.

Fortune favours the brave…. but not the foolish/ill-informed, or in- or re-active.

Subscribe to blog posts

Any views expressed are those of the author and not necessarily those of the Institute as a whole.