Pay, performance and transparency 2024

Findings

• Most organisations plan to raise pay in the year to October 2024 (69% already have plans to do so), with the main influences being inflation, the going rate of pay increases, and recruitment and retention pressures.
• With 44% of respondents still unable to predict how and when employee pay in their organisations might recover from the recent inflationary spike, the most common ways that employers are helping their workers with the cost-of-living crisis is by communicating how their existing pay and benefits package can help (28%), by highlighting sources of financial guidance (25%), by paying a cost-of-living supplement (25%), or by helping cut commuting costs (19%). 

Recommendations

Although the rate of increase in the cost of living is now falling, things will still cost more than they did previously. To help promote the financial wellbeing of employees, we recommend that organisations:

• focus on paying a fair and liveable wage
• offer financial wellbeing benefits, and
• provide opportunities for in-work progression.

For more detail, see the Pay section of the report and our recommendations.

Findings 

• For management, professional and technical employees, merit pay is the most common form of performance-related pay used by employers (41% of all), with other employees most likely to receive individual bonuses (31%).
• While most users of performance-related pay see a positive link, especially on performance itself and retention, most also believe there’s still room for improvement in how they appraise, manage and develop staff performance.
• For the 39% who don’t use performance-related pay, the most common reasons are lack of budget, or perceptions that it is controversial or divisive.

Recommendations 

• Remember that rewards need to recognise the reality of the individual jobs and teams in which they are given, reflecting whether they are rewarding individual performance or team collaboration.
• Ensure rewards are clearly and consistently linked to performance and are transparent: Operating different types of schemes can create complexity for employers and tensions within the workforce.
• Review ways of developing, appraising, managing and rewarding performance: Try not to become overly focused on rating performance and instead ensure that managers are trained to get the best out of staff.

For more detail, see the Performance section of the report and our recommendations.

Findings 

• Pay transparency is limited: While organisations are far more likely to publish salary ranges compared with specific salary information, only 41% always share ranges in external job adverts, and only 18% always share specific salaries in internal job adverts.
• The only pay inequality analysis carried out by a significant proportion of our respondents is for gender pay gaps (44%). Lower proportions carried out equal pay audits (32%) and ethnicity pay gap analyses (28%).
• Only 54% of organisations check that their employees understand their pay, despite the finding that requests for information about pay have increased in the last year, perhaps because of the cost-of-living crisis. 

Recommendations 

• Publish pay information in job adverts: This can help widen your pool of candidates and help reduce pay and pension gaps. If you use salary scales, give an indication of where you would expect the successful candidate to start on this pay scale and where you would expect them to be after a few years.
• Be more transparent about pay internally: Given legislative trends in the US and the EU, we expect a similar direction of travel in the UK. Share pay scale information with existing employees, and how pay varies by protected characteristics such as ethnicity.
• Promote other elements of your reward package to employees: You could offer total reward statements that remind staff of other benefits, such as private medical insurance, pensions, annual leave or company shares, or consider flexible payment options, such as more frequent payment cycles or letting employees choose their own pay date.

For more detail, see the Transparency section of the report and our recommendations.

We surveyed 832 UK HR professionals, reward professionals and senior decision-makers in differing size organisations across the private, public and voluntary sectors in October 2023.

They were asked a set of questions on the factors driving wage growth, the impact of the cost-of-living crisis, how their organisation links pay to performance and the level of pay transparency within their organisation.

At ADP, what we do is about people. While we have a strong history of providing solutions for human resource challenges, we strive to do more than that. We challenge ourselves to anticipate, think forward and take action in a way that empowers us to shape the changing world of work.  

For 75 years, ADP has been leading the way in defining the future of business solutions. ADP is proud to be named to FORTUNE Magazine’s “World’s Most Admired Companies®” list for 16 consecutive years. 

We are a comprehensive global provider of cloud-based human capital management (HCM) solutions that unite HR, payroll, talent, time, tax and benefits, and a leader in business outsourcing services and analytics. Our experience, deep insights and cutting-edge technology have transformed human resources from a back-office administrative function to a strategic business advantage.