Employees lose faith that rewards will accurately reflect how hard they work


Employees lose faith that rewards will accurately reflect how hard they work, as economic realities bite

All too many employees across all sectors of the economy were dissatisfied with the size of pay rise and bonus they received in 2011, with the majority seeing their salaries either frozen (48%) or cut (5%), and just 18% awarded a cash bonus. That’s according to the Chartered Institute of Personnel and Development’s annual survey of Employee Attitudes to Pay, which also found that employees are readjusting their expectations for the coming year in line with the economic climate.

Amongst those who did receive a pay rise in 2011, satisfaction levels have dipped slightly since last year but, nevertheless, net satisfaction remains strongly positive (+56 in 2011, compared with +61 in 2010). The main explanation given by employees for being satisfied with their pay rise is that it reflected the state of the economy. Less than a fifth (19%) felt that their pay rise had reflected how well they worked.


Key findings

Employer pay decisions in 2011

  • 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 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

  • More than a quarter (26%) of the employees surveyed work for employers that operate a cash bonus (33% in the private sector and 11% in the public sector). Almost seven in ten (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%).

A final word

”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.” - Charles Cotton, rewards advisor at the CIPD.

Want to know more?

Title: Employee Attitudes to Pay, Chartered Institute of Personnel and Development, January 2012.

Survey details: The report is based on a survey of 3,056 working adults, across all industrial sectors. The survey was carried out between 1 and 7 November 2011 and is “representative of the UK workforce in relation to sector, size and industry type”.

According to the CIPD, the aims of the research are to examine:

  • employer pay decisions

  • the basis of these choices

  • employee reactions to these pay rise and bonus award decisions

  • employee pay and bonus decision forecasts for 2012.

Availability: The 42-page report is available for download in PDF format, free of charge, at www.cipd.co.uk/hr-resources/survey-reports/employee-attitudes-pay-2011-2012.aspx.

The Chartered Institute of Personnel and Development (CIPD) is “the world’s largest chartered HR and development professional body, setting global standards for best practice in HR”. With over 135,000 members across 120 countries, the CIPD is “focused on supporting and developing those responsible for the management and development of people within organisations”. To find out more visit www.cipd.co.uk.