Workers prefer year-round support to annual bonus
Employees prefer consistent pay-rises to a single end-of-year bonus, according to new research. With employers still dismissing the idea of pay keeping pace with inflation, young workers are particularly vulnerable – with six-in-ten under the age of 34 saying bonuses had become ‘a lifeline’ in the cost-of-living crisis.
Even as some experts point to the ‘cautious optimism’ inspired by inflation falling – albeit in a way that neglects the lived experience of most British consumers – few are finding the opportunity to ease off spending cuts. While the ONS found that the average wage growth in the UK rose above inflation in August, it is the first time that has happened in two years. The fact most employers did not keep pace with inflation has left the average household more than £2,300 worse off – which a couple of months of quicker wage growth will not make up for. At the same time, not all employers are granting pay-rises, even now.
To that end, research from employee benefits firm Zest has found that as businesses look to save for the future, or protect their bottom-lines, 29% are unwilling to raise salaries. Instead, they are choosing to focus on their benefit offerings, including end of year bonuses, to obtain and retain new talent. However, that is impacting exactly who they can and can’t attract in the hiring process.
Of 2,000 adults in the UK, 62% said that they would prefer a consistent pay-rise over a bonus – as it would help them make ends meet more steadily throughout the year. As it is, a number of employees rely on their annual bonus as a ‘lifeline’ – something which would weigh on their minds throughout the whole year, in a way that a consistent pay-rise could help ease. In turn this would likely improve their performance.
These financial matters weigh differently on different generations, too. Only 20% of employees aged over 55 admitted annual rewards provided a financial lifeline, but among adults between 18 and 34, that rose to 58%. As companies allege that they are fighting a war for digitally savvy talent, it may be worth taking stock of the situation, then. Offering a consistently healthy rate of pay, rather than an all-or-nothing lump sum at the end of the year might help firms attract digital natives in the long-run, bringing essential new skills on board.
Additionally, younger employees also suggested they would favour other forms of financial support all year, to a single festive bonus. A 61% majority of those between 18 and 34 said they would prefer support such as workplace savings schemes or discount vouchers – compared to just a fifth of older employees.
Matt Russell, CEO at Zest, commented, “While one-off bonus payments are hugely welcome, employers should consider whether these short-term rewards are what employees want or need. Many younger employees value year-round financial support much higher than a bumper one-off payment just before Christmas. Employers need to ensure that they’re communicating with their employees to understand the most effective approach to reward and support all employees this Christmas and tailor this to the needs of specific groups across the workforce.”
