One-third (33%) of employers will offer pay awards of 5% or more in 2023, according to research by ethical reward management consultancy Paydata.
Its spring 2023 UK reward management survey, which surveyed HR and reward professionals across 208 organisations representing nearly half a million employees, also found that 37% will offer pay awards between 4%-5% in 2023.
Just over a third (35%) are offering an across-the-board pay increase, 32% are awarding a combination of across-the-board and individual increases and 17% are making individually determined increases.
Almost three-quarters (71%) of respondents said external relativities are driving their pay actions, 40% said these are driven by internal relativities and 43% are targeting high-performing employees with pay increases. Eight in 10 (82%) used out-of-cycle pay increases and 80% anticipate using out-of-cycle pay increases in 2023.
The cost-of-living crisis led to one-third paying a lump sum to support employees in 2022, paying a median amount of £750. Some 15% have already decided to pay a lump sum in 2023 and 14% are considering doing so, with a median of £550 noted.
In addition, actual or expected median bonuses for main board directors have reduced from 41%-45% in spring 2022 to 26%-30% in spring 2023. Employers’ top three priorities for the year ahead include pay benchmarking (74%), employee opinion surveys (72%) and benefits benchmarking (68%).
Tim Kellett, director at Paydata, said: “Our spring survey reveals that those opting for higher pay levels are at an all-time high. Fewer employers are set to offer a lump-sum payment, and those that are will offer a lower amount; this indicates hope that the cost-of-living crisis will start to abate over the next few months.
“This raises the importance of taking a holistic approach to reward decisions, to avoid pay parity issues further down the line. By offering greater support, clear development opportunities and aligning with their values by understanding what matters to employees, businesses can build a sustainable culture that people want to stay and join.”