Survey Shows UK Employers Happy to Pay More for Top Performing Workers

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8th April 2013 15:13 - Professional Services


Market research by consultancy firm Towers Watson has revealed that despite tight budgets in the current economy, UK employers are happy to retain high-performer workers by paying them extra salary increases or bonuses.

The in-depth survey of 124 employers found that line managers are driving up wages with pay differentiation - 93% report rewarding key staff over their colleagues, and many don’t balk at offering more than double the average increase to keep important employees on board.

These significant differences in wage increases indicate that UK employers are looking to make the most of limited budgets (which typically stand at 3% for base pay increases). The strategy of pay differentiation is on the rise, with more than a quarter (28%) of companies claiming they varied salary rewards more than they have done in previous years.

In addition, firms with low pay budgets (under 2.5%) differentiate remuneration more than companies with larger pay bill increases (3% or more) – they generally offer high performers pay raises which are twice as large as their mediocre performing peers.

The most important factor voted by employers which determines higher remuneration is individual performance, followed by market alignment (72%), internal consistency (57%), key skills (44%) and potential (39%).

Nevertheless, half the survey respondents said that poor line-management skills had prevented the use of pay differentiation, with 23% blaming a lack of tools to identify talent and 37% citing the barrier as firms failing to ask line managers to explain the rationale behind the differentiation so that staff can understand what standards of high performance they need to achieve.



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