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Employees readjust expectations as pay and reward reflects economy rather than hard work

  3rd January 2012      
 Company News

Employees lose faith that pay and reward will accurately reflect how hard they work as economic realities bite.

By the end of 2011, many employees across all sectors were left dissatisfied with the size of pay rise and bonus they received. This is unsurprising given that 48% of people’s pay was frozen and 5% had pay cuts while just 18% received cash bonuses, according to the CIPD annual Employee Attitudes to Pay survey. The results also showed that employees are readjusting their expectations for the coming year in line with the economic climate.

Of those who did receive a pay rise last year, satisfaction levels remain positive despite dipping slightly to +56 from +61 in 2010. The main reason that employees feel happy with their pay rise was found to be that they feel it reflected the state of the economy — only 19% felt that their pay rise reflected how well they personally worked.

CIPD Rewards advisor Charles Cotton says: “It’s encouraging to see that employees recognise the impact the state of the economy has on their employers’ ability to reward them with pay rises and cash bonuses. However, one of the main reasons cited for dissatisfaction with a pay rise was feeling that it didn’t reflect how well the individual had performed. Employers must try harder to explain what performance the organisation values and how it will reward and recognise this. If not, levels of motivation and productivity could fall, perpetuating a vicious circle that could hold back both organisational performance and wider hopes of economic recovery.”

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Additional key findings of the CIPD Employee Attitudes to Pay survey 2011 are as follows:

  • Since 2008, the proportion of employees receiving a pay rise has fallen from 67% to 45% in 2011, down slightly on the 46% recorded in 2010.
  • By sector, 51% of private sector employees have had a pay rise since the start of 2011, 45% did likewise in the voluntary sector, but just 24% of those in the public sector have received an increase.
  • Among those receiving a pay rise the average (median) increase was 2.5%
  • The proportion of employees who have been subject to a pay freeze has increased from 24% in 2008 to 48% in 2011.
  • By sector, public sector employees (70%) are most likely to have seen their pay frozen in 2011, followed by those in the voluntary sector (48%) and the private sector (42%). In addition, 5% of employees saw their pay cut.

Cash bonuses:

  • 26% of the employees surveyed work for employers that operate a cash bonus (33% in the private sector and 11% in the public sector). 68% of those eligible for a bonus award received one, down on the 72% recorded in 2010.
  • Among those who received a bonus the net satisfaction score is +61. The most common explanations for bonus satisfaction are: it reflected how well I had performed at work (37%); it reflected how much money the employer has made (31%); and it reflected how well my team had performed at work (18%).

Satisfaction with employer pay decisions in 2011:

  • The net satisfaction score among those who have received a pay rise is +56 in 2011, down on the +61 recorded in 2010 and +62 in 2009.
  • The main explanations given by employees for satisfaction with their pay rise are: it reflected the state of the economy (27%); it reflected how well I had performed at work (19%) and it was more than I had received last year (19%).
  • The net satisfaction score among those who received a pay freeze is -41, down on the -26 posted in 2010 and the -23 in 2009.
  • The main explanations given for dissatisfaction are: it did not keep pace with the increases in the cost of living (up from 53% in 2010 to 63% in 2011); it did not reflect how well I performed at work (22%); and my pay is below what I could get elsewhere for doing the same job (18%).
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