Increase basic pay or offer bonuses?


23 Jun 2016


The ‘To Be or Not To Be’ question of the moment: Do you increase salaries for the whole workforce or provide a bonus payout for those who work unsociable hours? A troubling question especially in the retail sector, as M&S found out recently.

According to The Guardian, when the retailer recently revealed plans to increase basic pay by 15% and reduce special pay rates proportionately, it came to light that some employees could actually lose around £2,000 per year. Viv Copeland, Head of Reward at Croner, explains: “Pay is a highly motivational factor for some employees, so distributing pay across the workforce can be an enormous challenge. The pressure is on to make salary increases at least once a year but these funds have to come from somewhere. Undertaking a pay and grading review can be vital in this process, as it can highlight potential pitfalls before they arise.

“In a sector like retail, where many workers used to earn the National Minimum Wage, the introduction of The National Living Wage will have had a major impact, just as it has for organisations in other sectors. For instance, 20% of respondents to Croner Reward’s research around the topic stated that they would stop using pay as a differential/benefit, 20% also saying that they may need to make redundancies. “However, we would advise organisations to think very carefully about any pay decisions before taking action, especially in a climate where many UK workers are looking to change employer.”

To learn more about Croner Reward’s consultancy services, please call 0844 728 0103.

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