UK firms ‘not rewarding top performers’

Nick Elvin

Many companies in the UK are not taking into account staff performance when delivering compensation programmes, according to research by global professional services provider Towers Watson.

While salary remains the number one consideration for workers in the UK when deciding to join or stay with a company, the research indicates that employers are falling short in how they deliver pay packages including base salary and bonuses.

According to the 2014 Towers Watson Global Workforce Study, 39% of workers in the UK see a clear link between their pay and performance, while 43% think their employer adequately rewards individuals for break-through ideas. Forty-four per cent of employees say their company does a good job explaining its pay programmes.

Meanwhile, employers give themselves middle-of-the-road ratings on their effectiveness in delivering pay programmes. Forty-five per cent of UK companies said employee performance was fairly reflected in pay decisions; 42% believe employees understand how their base pay is determined, and 36% think their base pay programme is well executed.

Carole Hathaway, global leader of Towers Watson’s rewards practice, said: “Many forecasts are pointing to no significant wage growth until at least spring 2015, following many years when the real value of pay has been falling.

“There is no escaping the fact that pay really matters to employees when making decisions about whether to join or stay with a company. Without the current flexibility to expand the pay pot, employers are missing a trick by not using the resources they do have more strategically when it comes to rewarding employees. Instead, they seem to be spreading what they have more evenly than ever in an attempt to keep everyone happy, rather than rewarding their best performers for going the extra mile.”

The survey also found that a 31% of employers give a bonus to employees with the lowest performance rating.

“It is especially surprising that a third of employers are awarding a bonus to those employees with a low performance rating, a substantial increase since 2010,” added Hathaway. “This impedes their ability to reward top performers as part of their pay for performance efforts.”