Total reward strategies in 2024 and the direction for 2025: planning, purpose and practice
16 Dec 2024
Dr Duncan Brown, Principal Associate
React, respond, change… but where are we heading?
I have had an excellent fortnight on the professional front, finding myself at the centre of a wonderful wealth of ‘action-learning’ and knowledge on contemporary total rewards.
First, I co-moderated a lively reward leaders’ roundtable at the Reward and Benefits Association (REBA) Future Forum. Then I presented some of IES research and consulting material in a well-attended webinar, Transforming HE workplaces: The power of Total Reward run by our friends at UCEA (the Higher Education employer body).
And finally last week, I facilitated my two-day total reward strategy masterclass. So what would be my impressions on what this all says about the contemporary state of UK total reward management? I would pull out three key areas.
1. Get a more strategic reward plan
The surprise increase in employer National Insurance Contributions announced by the Chancellor in late October’s Budget is just the latest unplanned ‘shock’ reward that leaders are having to respond to, after the series of crises since our first pandemic for 250 years.
Despite successful responses, the need for a more strategic approach seems a clear realisation for many of these leaders. It’s now driving serious activity on total reward strategies – a priority for 60% of the 7,000 respondents in Korn Ferry’s latest Global Total Rewards Pulse Survey.
This survey presents a general picture of ‘ad hocery’ in response particularly to the intense skill shortages that the UK is suffering from. ‘Quick fixes’, like offering ‘golden hellos’, through to thrice-annual pay reviews for supermarket workers, and even to retention bonuses for Father Christmases, have their place in any reward toolkit. But used on a widespread basis they risk becoming dysfunctional, for example creating equal pay risks, and meaning new recruits are commonly paid more than experienced staff.
It’s vital now to get more strategic and planned, if only to better prioritise and focus our work in a tightly resource-constrained context, a ‘talent/cost’ crunch as one leader described it. But in the current climate, will even providing a clear strategic direction and plan of activities suffice?
2. Align rewards with purpose, values and culture
So, what’s the ‘big idea’ driving your reward strategy, and how aligned are your pay and rewards with the culture and values of your organisation?
Traditionally, employers could get away with vapid wish-statements of corporate values. But today, inconsistencies with the reality in the organisation will be rapidly called out by internal and external stakeholders.
So, we are seeing ‘total rewards’ ideas expanding to more explicitly encompass values and cultures, as well as covering development and career progression opportunities which employees value highly.
Head of Reward Sarita Coleman for example, explained at my webinar that the RSPCA’s total rewards offer covers: ‘pay, benefits, employee development, culture and lifestyle’.
This trend is particularly evident in the increasing numbers of employers with an ‘Employee Value Proposition’. Olivia Farley from NHS Employers explained that the ten-year NHS Long-Term Workforce Plan requires trusts to work with stakeholders in developing a clear employee value proposition.
Potentially this expansion in total rewards offers a more powerful and performance-enhancing approach to reward strategy. But it is also one which can be even more difficult to deliver in practice.
3. Focus on reward practice and the employee experience
Despite the successful initiatives of many reward professionals in reacting to the crises of the 2020s, the challenging economic context has meant many workers don’t feel, and in reality are not, better off. Even using the term ‘total rewards’ can become toxic - some of my charity clients deliberately avoid using it.
Programmes which you can’t put into practice as intended are never going to be effective. Take wellness, new IES research, supported by the Health Foundation, draws out the ‘sticking plaster’ nature of many wellbeing benefits. They are well-intentioned but fail to address the underpinning drivers of ill health, derived from poor job and work design.
Ignoring the real-life experiences of your employees means you are ignoring their engagement. Gallup’s State of the Global Workforce (2024) found only 10% of their UK workforce sample was fully engaged, versus their global average of 23%. They estimate the economic cost of this ‘engagement crisis’ to be £257 billion.
My reward strategy group demonstrated employers are focusing now on assessing the effectiveness of their interventions, especially from the perspective of their employees.
Helping a large retail bank to ‘refresh’ their reward strategy, we used one of their quarterly pulse engagement survey updates to send 20 questions on reward to a sample of 10% of their workforce. Our findings were key in securing board agreement to the pay progression and benefits changes they are now progressing.
This rightful re-emphasis on the implementation and experience of reward policies is reinforcing work on their communications and management. For example:
- Manchester University NHS Foundation Trust has trained employee ‘reward champions’ to help improve the staff experience, health and wellbeing.
- The RSPCA implemented a host of new comms initiatives, including: a highlighted ‘benefit of the week’; and improving their reward intranet pages.
- A public sector agency schedules regular 'HR clinics' for managers to deal with any issues that emerge during their annual pay review process.
- Another charity has introduced a line management panel, which any proposed changes to HR arrangements are discussed with before implementation.
Putting strategically planned, purposeful rewards into practice
The sheer energy, innovation and tremendous range of work in the current UK rewards landscape is the most abiding impression of my experiences at these various reward events.
After crisis-responses, many reward leaders want now to be more proactive, to plan a reward strategy that can provide:
- a clearer statement of reward direction and purpose
- a definition of what ‘good’ in reward means and looks like in their organisation
- a better definition of how their reward investments can best be used
- an integration of their multifarious range of pay, benefits and non-financial rewards
I have seen many such examples in recent weeks and we expect to see more in our work at IES in 2025. As the inscription on a door lintel in my old 16th century grammar school exhorted us: ‘abi tu, et fac similiter’— go, thou, and do likewise!
Any views expressed are those of the author and not necessarily those of the Institute as a whole.
| Category | Blog posts |
|---|---|
| IES contact |
 Duncan Brown
|