Weekend Read: Most Brits believe their last pay rise was unfair
Two in three workers think their most recent pay rise was unfair and didn’t reflect their job performance
Despite this, only one in nine are actively job hunting and interviewing for a new role, new research by HR and payroll software provider CIPHR suggests.
The pay rise study, based on a survey of over 1,000 employed British adults, reveals that 64 per cent of people think that their last raise wasn’t fair, 70 per cent that it wasn’t reflective of their work, and 59 per cent that it wasn’t in line with the market rate for their role.
A significant majority (78 per cent) also share the view that their salary increase doesn’t match the rising cost of living in the UK, with higher inflation causing real wages to fall over time.
Half of all respondents report not having received a pay rise for 2022.
Although that doesn’t mean they won’t receive one in the coming months, as 23 per cent of respondents say they haven’t received a pay rise yet but do expect to.
For those that have received a recent pay rise, 10 per cent say that their pay increase was below the rate of inflation (currently 5..5 per cent), 13 per cent that it was in line with inflation, and just 4 per cent say that it was above the rate of inflation. Four times as many men than women reportedly received an inflation-beating wage hike (8 per cent compared to 2 per cent).
Correlation between salary hike and leaving
Looking at the results, there is a clear correlation between an employee’s thoughts about their recent salary increase and the purported likelihood of them leaving their employer. Staff who are dissatisfied with their pay rise – for whatever reason (including feelings of unfairness or concerns about not being paid in relation to their job performance or the market rate) – are more likely to admit that they intend to change jobs or are already in the throes of doing so.
Over two-fifth of respondents who believe that their last pay rise was unfair say it’s likely or very likely that they will change employer within the next year, compared to just 25 per cent of people who believe that their last pay rise was fair.
Similarly, 40 per cent of people who think that their last pay rise wasn’t truly reflective of their recent job performance say they intend to quit. In comparison, only 29 per cent of people who think that their pay rise was on par with their performance are planning to do the same.
The majority (63 per cent) of workers, however, are likely to stay put. Over two-fifths say they are not planning to move jobs but are open to it, while one in five say they are happy to stay in their current role – at least for the next year.
It wouldn’t take too much to change their minds though, as 79 per cent of the people who say they aren’t planning to switch jobs this year would only need to be offered a 10 to 14 per cent pay rise by a recruiter to consider a similar role at a different firm.
A third would hold out for a salary increase of at least 20 per cent or more.
The risk for employers is that one in five (21 per cent) employees, on average, have been approached by a recruiter or head-hunter in the past three months.
Different perspectives
Interestingly, a separate survey to 332 British employers on the same topic reveals that nearly two-thirds of organisations have (or are planning to) award their staff a pay increase for 2022 that’s in line with, or above, the rate of inflation.
This suggests that employees may receive more of a pay rise than they expect in the year ahead.
There is a distinct disconnect though between how employees and employers perceive how their pay rise is determined, which could explain perhaps why so many employees don’t often agree with the increment they receive.
Based on the findings of CIPHR’s employer survey, an employee’s job performance tops the list of factors that organisations base their salary reviews on. Nearly half of employers selected it as a key determiner of pay rises.
And yet, only 30 per cent of employees, on average, felt that their latest pay rise was a true reflection of their job performance.
“Transparency around pay and reward processes and policies is important for ensuring a fair and equitable approach to pay and to ensure valid business reasons for any variances in pay,” said Claire Williams, chief people officer at CIPHR.
“From an employee’s point of view, transparency around salary grades or pay banding structures helps to provide clarity around expectations of earnings.”
Claire Williams
Williams told City PM. that “there’s no denying that people’s perception of their own value in the workplace is closely linked to the financial package they receive and employees want to feel financially rewarded for the skills and experience that they bring to an organisation.”
“No matter what you do around pay, if a holistic approach isn’t taken to your overall employment value proposition you’re likely to lose more staff in the long run.”