The traditional pay rise may no longer be the only answer to keeping UK workers happy, as new research reveals employees increasingly value benefits that give them greater financial security, flexibility and time.
New findings from HR, pay and time specialist SD Worx reveal a growing tension between household finances and employers’ ability to meet rising salary expectations. Eight in ten (80 per cent) UK employers say employees’ pay expectations have increased because of the higher cost of living. However, just 39 per cent of UK employees feel their pay has kept pace with the cost of living, while almost a third (32 per cent) say they are experiencing financial stress.
With continued pressure on both household and business budgets, employers are increasingly looking beyond headline salary to make their overall reward packages work harder. 59 per cent of UK employers say they are exploring benefits and other non-salary options to improve their employee value proposition while reducing costs.
For employees, one of the clearest opportunities is not necessarily more money, but more time.
Almost half (47 per cent) of UK employees say they would like to receive additional days off as a workplace benefit, making it the most sought-after workplace reward. However, just 17 per cent currently receive additional leave, creating a 30-percentage-point gap between what workers want and what they actually get. Flexibility also remains high on the wish-list. More than a third (36 per cent) would like flexible working hours, while only 32.5 per cent say they currently receive them. 31.5 per cent would also like access to health and wellbeing programmes.
The findings suggest that, at a time when simply increasing salaries may be difficult for some organisations, employers could have an opportunity to rethink the value of their overall package and focus on benefits that employees would genuinely value.
That does not mean money has become less important. Instead, employees appear to be thinking more broadly about financial security. 40 per cent of UK employees say they value pension and retirement planning support, making it considerably more attractive than performance-related pay (24 per cent) or pay linked to skills and competencies (23 per cent).
UK employers are already comparatively strong on pension provision, with 59 per cent offering pension plans , compared to their European counterparts (31 per cent), and a third (33 per cent) providing retirement planning support. But against a backdrop of continued pressure on household finances, the findings suggest employees are looking beyond their monthly salary towards benefits that can provide greater financial resilience over the longer term. Other financial benefits are also attracting interest. Three in ten employees value discounts or support with the cost of living, while 29 per cent value transparent information about pay levels and fairness and 28 per cent want a clear overview of their total rewards and benefits.
Transparency could prove particularly important as employers try to demonstrate the true value of their reward packages. Nearly three-quarters (72 per cent) of UK employees say pay transparency is important or very important when deciding whether to join or stay with an organisation.
Yet there are signs that conversations about pay remain difficult. While 65 per cent of managers are considered confident discussing pay and reward with employees, just 38 per cent of employees themselves feel comfortable discussing or asking for a pay increase.
“For UK households, the pressure on pay hasn’t disappeared,” Laura Miller, UK People Country Leader at SD Worx, commented: “When fewer than four in ten employees feel their salary adequately reflects the cost of living, employers can’t afford to assume that people feel financially secure simply because they’ve received a pay rise. But the answer isn’t necessarily for businesses to keep increasing salaries indefinitely. What we’re seeing is a much broader definition of value emerging. Employees are telling us that time, flexibility and longer-term financial security matter too, whether that’s an extra day of annual leave, greater control over working hours or meaningful support with their pension.
“That’s an important opportunity for employers, particularly when their own costs are under pressure,” adds Laura. “A reward package doesn’t have to cost more to feel more valuable, but it does have to reflect what employees actually want. The businesses that understand that distinction – and communicate the full value of their package clearly, will be in a much stronger position to attract and retain people.”
