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Employee Attitudes to Pay

Annual Survey Report 2010

Contents

Background and objectives Sample breakdown Redundancy Satisfaction with pay Communicating changes in pay Pay increases in 2010 Cash bonuses Communicating changes in bonuses How employees would like to be paid Measuring performance Employee feelings Lifestyle Conclusion Regional Analysis
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Slide 3
Slides 4
Slides 5‐6
Slides 7‐21
Slides 22‐26
Slides 27‐32
Slides 33‐39
Slides 40‐43
Slides 44‐45
Slides 46‐47
Slides 48‐49
Slides 50‐52
Slide 53
Slides 54‐57

Background & Objectives

The Chartered Institute of Personnel and Development (CIPD) is the professional body involved in p ) y the management and development of people. The CIPD conduct research on a regular basis on subjects relevant and topical to the HR community. This th third Thi is the thi d wave of research among UK employees to id tif th ir opi i f h l identify thei inions and attit d d ttitudes towards pay and bonuses. The first wave of research was conducted in 2008, the second in 2009 and this current survey builds on the previous data collected. This wave includes new questions relating pay rises, cuts and freezes and how employees are coping with the current economic environment. The research f h h focussed on areas such as: d h • To what extent UK organisations explain to employees what is expected from them • How pay rises and bonuses are determined and communicated to employees
• The effect of pay decisions on employee engagement engagement
• How satisfied employees were with their pay, and how they think they compare to the
market

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Sample Breakdown

Key Groups

N

%

Key Groups

N

%

All working Men Women Full time Part time Private Sector Nationalised industry or public corporation Other public sector employer Charity/ Voluntary Sector Micro organisation (2 to 9) Small organisation (10 to 49) Medium organisation (50 to 249) Large organisation (250+)

3083 1771 1312 2691 392 2278 36 549 189 349 436 443 1749

100 57 43 87 13 74

Middle Management and above Junior manager/ team leader/ supervisor No managerial responsibilities Other Working less than one year Working between 1 and 5 years

997 799 1199 60 356 1195 1531 99 834 762 723 665

32 26 39 2 12 39 50 3 27 25 23 22

1 Working over 5 years 18 6 11 14 14 57 18 to 24 25 to 34 35 to 44 45 to 54 55 +

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Redundancy

42 employees earning less after redundancy • • • Similar to 2009. On (median) average these people are earning 20% less than what they did previously. Just over two in ten are earning more (23% / n=15).Salary after being made redundant Median 25% Median 20% • Please note caution should be taken due to small sample size for 2009 and 2010 figures: • • 2009: 69 employees made redundant. two thirds (64% / n=42) of employees who were made redundant in the past year are are earning less compared to what they used to earn. and 14% ( 9) 15) d (n=9) the same as they were before being made redundant. Base: All who have got a job in the past 12 months since being made redundant and now earn less 6 *Caution small base size . 46 employees earning less after redundancy 2010 : 66 employees made redundant.

Satisfaction with pay .

Breakdown of Employee pay… ƒ Since 2008 there has been a significant decrease in the proportion of respondents who have received a pay increase. by 2010 this figure has almost doubled (44%). ) Likewise. While the public sector are facing cuts. With cuts occurring across the public sector it is not surprising that the number of respondents p g p likely to receive a pay rise in the public sector has decreased significantly from 76% in 2009 to 42% in 2010. Although the proportion who have seen a pay cut increased significantly between 2008 and 2009 (3% to 5%) it has remained consistent this year. respondents within the private sector were significantly more likely to receive a pay rise in 2010 than they were in 2009 (50% compared to 40%). falling from two thirds (67%) in 2008 to h lf ( ( ) half (49%) in 2010. Base: All working respondents (excluding owner/ proprietor) who have been in their job for more than a year ƒ ƒ ƒ ƒ 8 . the number of employees who have had a pay freeze has also been on the up with the figure increasing by 20 percentage points since 2008 Just over two in ten (24%) had a pay 2008. freeze in 2008.

been no change (+61). whi h could possibly ithin h l hich ld ibl explain why they are more likely to receive pay rises. Base: All working respondents (excluding owner/ proprietor) who have received a pay rise in the last 12 months 9 .Net Satisfaction 1 – pay rise • n=1341 n=1123 n=90 n=66 • n=186 n=120 n=188 n=138 n=829 n=776 • Net satisfaction is calculated by subtracting the percentage of employees satisfied from the percentage who are di tisfi d. While last year the proportion of employees who were satisfied with their pay rise doubled from net +31 to net +62 this year there has +62. which makes up a third (32%) of large organisations within the sample. Th scores t h dissati fied The have been produced for key interest groups. • Three fifths (59%) of respondents working within large organisation fall into the private sector wi hi the sample. respondents working within large organisations continue to be most likely to receive a pay rise. Despite overall net satisfaction scores remaining more or less similar there is an indication that satisfaction across SMEs has increased slightly: • • • Micro organisations increased from +80% to +86% Small organisation increased from +77% to +84% 8 % Medium organisations increased from +68% to +76% n=1009 n=648 n=210 n=342 • Nonetheless. The dissatisfaction could stem from the public sector. despite being least satisfied with it (net +54).

Despite this shift. However. . although their net y . women were just as likely as men to receive pay increases (50% compared with 48% respectively). satisfaction among respondents with no managerial responsibility who received a p y rise p y pay seems to be decreasing (+59 in 2010 compared with +65 in 2009). g satisfaction score has decreased by 3 percentage points. satisfaction among those middle managers who receive a pay rise continues to increase (+72 in 2010 compared with +68 in 2009).Net Satisfaction 2 – pay rise • n=1341 3 n=1123 n=570 n=526 • n=771 n=597 • n=393 n=353 n=382 n=315 n=533 n=356 • Base: All working respondents (excluding owner/ proprietor) who have received a pay rise in the last 12 months 10 Women continue to be more satisfied with their pay rise than men. While Whil satisfaction scores among j i if i junior managers remains the same. Middle managers and above continue to remain significantly less likely than junior management and those with no managerial responsibility to receive a pay rise.

22% of respondents are satisfied with their pay increase because they feel it has kept pace with inflation. Base: All working respondents (excluding owner/ proprietor) receiving a pay rise who were satisfied with it Only answer codes with at least 10% response in 2009 are shown 11 *Not asked in 2009 . the increase.Reasons for satisfaction about pay increase size RPI has gone from being negative in 2009 to +4.5% in October 2010 Despite 2010.

Reasons for satisfaction about pay increase size ‐ Public Vs Private Base: All working respondents in the public and private sectors who received a pay rise and were satisfied with it Only answer codes with at least 10% response are shown 12 .

Reasons for dissatisfaction about pay increase size Base: All working respondents (excluding owner/ proprietor) receiving a pay rise who were not satisfied with it Only answer codes with at least 10% response in 2009 are shown 13 .

14 . • In 2009 73% of respondents working in large organisations were dissatisfied with their freeze. compared with ‐24. • • Respondents working within small organisations seem least dissatisfied with a pay freeze as their net score drops 20 percentage points to ‐26. Respondents worki within th public sector d t king ithi the bli t continue to be less satisfied than their private sector counterparts.Net Satisfaction 1 – pay freeze • There has been no significant change in level of g g y satisfaction among those receiving a pay freeze hence a similar net satisfaction score: • In 2009 37% were satisfied and 60% were not satisfied. in 2010 this figure reduced to 67% hence improving the net satisfaction score. except larger organisations where the score has improved from ‐48 to ‐38. This year the figure is 35% and 61% respectively. • Nonetheless the gap between the sectors seems to be narrowing. with a net score of ‐32. p y • Net satisfaction scores have declined across all organisation sizes.

with the exception of middle managers and above. • Despite having a positive net satisfaction score. • In In 2009 women had a net satisfaction score of ‐36. Men on the other hand had a net satisfaction of ‐13 which has gone down to ‐25. satisfaction for middle managers and above decreased from +8 to +2. • Women continued to be more dissatisfied with their pay freeze than men with a net satisfaction score of ‐ g 28.Net Satisfaction 2 – Pay freeze • Similar to 2009. this has improved slightly to ‐28. • 15 . all groups had negative net satisfaction scores indicating that they were dissatisfied with their organisations’ decision to give them a pay freeze. However dissatisfaction among men has seemed to increase while among women it seems to have decreased.

Reasons for satisfaction about a pay freeze Base: All working respondents (excluding owner/ proprietor) receiving a pay freeze who were satisfied with it Only answer codes with at least 10% response are shown *Caution small base size 16 .

Reasons for dissatisfaction about a pay freeze Base: All working respondents (excluding owner/ proprietor) receiving a pay freeze who were not satisfied with it 17 Only answer codes with at least 10% response in 2010 are shown .

Reasons for dissatisfaction about a pay cut Base: All working respondents (excluding owner/ proprietor) receiving a pay cut who were not satisfied with it (n=89)* *Caution: Low base size Top 5 responses are shown 18 .

• Respondents were asked what would cause them to be dissatisfied with their pay (including bonuses). earning less than people doing the same type of job within their organisation would cause them to be dissatisfied with their job.Causes of dissatisfaction with pay. A third (32%) would be dissatisfied with their p y pay if they were earning less than p p y g people doing the same type of job outside their organisation and for one in five (21%) pay not reflecting how much money the company has made would also cause dissatisfaction • Men were significantly more lik ly than M i ifi l likel h women to state that pay not reflecting how much money the company has made as a reason for dissatisfaction (24% compared with 17% respectively) • • • Base: All working respondents (excluding owner/ proprietor) (n=3083) Top 10 reasons shown 19 . For the majority (56%). Respondents within the public sector were significantly more likely to state this than those within the private sector (65% compared with 53%)... Just under half (48%) said their pay not d h lf id h i reflecting how well they perform would lead them to be dissatisfied with their pay ‐ respondents within the private sector were significantly more likely to state this than state their public sector counterparts (52% compared with 38%).

p y Results indicate that despite receiving a pay rise some employees (18%) are not satisfied with it ‐ the key question then is why? Respondents who received a pay rise were asked to give the main reasons for why they were dissatisfied: • • • Over half (52%) said ‘It did not keep pace with increases in the cost of living/ inflation’ Under a third (27%) said ‘It did not reflect how well I had performed at work’ In ddi i I addition. .Lack of satisfaction overall • • • In 2010. just under half (49%) received a pay increase. 17% said they would leave their organisation within a year and 7% said they would work ‘less 20 hard’. With RPI being negative in 2009 for the first time since 1960 and now creeping up to +4 7% in November 2010 it is +4. one i fi (19%) said their pay i b l what they could get elsewhere f d i the same j b in five id h i is below h h ld l h for doing h job • • Similar to last year. two fifths (44%) experienced a pay freeze and 4% received a pay cut. the main reasons for dissatisfaction were inflation and individual performance: • • 29% It did not keep pace with increases in the cost of living/ inflation 27% It did not reflect how well I had performed at work • All working respondents were asked how they would be most likely to react if they were not satisf d with their 2011 pay decision – the majority ( fied h h h (56%) said they would carry on at work as ) d h ld k usual. the main factor for dissatisfaction among those receiving a pay freeze continues to be that it does not keep pace with increases in the cost of living/ inflation (53%). Among employees who received a pay cut (caution due to small base size).7% perhaps not surprising that this continues to be more of a concern.

however there are i di ions that similar h ived d ll i h indicati h i il to pay rises and freezes the main reason for dissatisfaction is that ‘It did not keep pace with increases in the cost of living/ inflation’. however for private sector employees the main reason for dissatisfaction was because ‘It did not keep pace with increases in the cost of living/ inflation’ (51%) followed by ‘It did not reflect how well I had performed at work’ (32%) and ‘My pay is below what I could get elsewhere for doing the same job’ (23%). • • • • 21 . Respondents working within the private sector who experienced a pay freeze were significantly more likely than their public sector counterparts to state their ‘pay is below what they could get elsewhere for doing the same job’ (21% compared to 14%). is that the pay freeze was below the pay increases of senior management (18% public sector compared with 8% private sector). Less important for private sector employees but more so for those working in the public employees. it is not possible to analyse dissatisfaction among public sector employees who received a pay rise. It is not possible to analyse dissatisfaction among public and private sector employees who recei d a pay cut due to small base sizes.Lack of satisfaction – Public Vs Private Sector • Due to small base size. sector. Not keeping N t k i pace with th cost of li i / i fl ti and not reflecting performance at work ith the t f living/ inflation d t fl ti f t k were the same reasons given for dissatisfaction with a pay freeze in both the public and private sectors.

Communicating changes in pay .

Internal Communication about pay rise • Just under two thirds (64%) of respondents said their organisation explained to them why th i pay increased. Those who received a pay freeze were significantly more likely to state that their organisation did not explain their decision to them than those who had a pay rise/ cut: • 35% of employees who experienced a pay freeze said their organisation did not explain why they froze their salary/ wage compared to 29% who received a pay increase and 17% who received a pay cut. • • 23 . decreased or froze. Respondents who received a pay cut were significantly more likely to state that their organisation explained their decision to them than those who received a pay rise/ freeze (82% compared with 66% who received a pay rise and 60% a / pay freeze). A third (31%) said th ir t th h their d d d 31% id thei organisation did not explain it to them and 5% didn’t know/ could not remember.

freeze or cut) is due to the state of the economy (47%) followed by how much money the organisation has to spend (41%) and individual performance (19%). 24 . the amount of money an organisation had to spend also worked in favour of some and against others: • The second most common reason for receiving a pay rise was how much money the organisation had to spend (33%) Interestingly. increase.Reasons for a change in pay • • • Similar to 2009. For a quarter (26%) the state of the economy was cited as a reason for a pay rise. the most common reason given for a pay rise continues to be ‘individual performance’ with just over a third (34%) stating this this. while for most it has worked against them: • 70% f 70% of respondents who received a pay freeze d t h i d and 63% who received a pay cut said it was a result of the economy • Similar to the economy.e. %) %) When split by the three pay decisions. the most likely explanation for a most likely explanation change in pay (i. the second most common reason for receiving a pay cut (46%) and freeze (51%) was also down to how much money the organisation had to spend • Base: All who received an explanation for their pay rise/ freeze/ cut.

Despite receiving a pay cut. Employees who recei d a pay freeze h ld the same h ived held h score (+11) In addition to being least satisfied with their p y pay decision. • • • Base: All who received an explanation for their pay rise/ freeze/ cut. While 94% of public sector employees in our survey work for larger employers just 49% of private sector workers do likewise.Net Satisfaction 1 – Explanation for pay decision • With a net satisfaction score of +40 respondents tended to be satisfied with the explanation given to them by their organisation on their pay decision. 46% of respondents were satisfied with the explanation provided by their organisation compared with 35% who were not. public sector respondents are .p p also least satisfied with the explanation around the decision (+24). The larger the organisation the lower the net satisfaction score – this possibl possibly indicates that respondents working within small organisation were far more likely to be satisfied with the explanation given than those working in larger organisations. 25 . leaving a net satisfaction score of +11.

26 . junior groups managers seem to be less satisfied with the explanation given to them by their organisation on their pay decision (+25). • Base: All who received an explanation for their pay rise/ freeze/ cut. Among the three groups. while middle managers and above are more satisfied (+55).Net Satisfaction 2 ‐ Explanation for pay decision • Women are slightly more likely to be satisfied with the explanation given for their pay decision than men (+41 compared to 39 of men).

Pay increases in 2011 .

with it be g t e main the economy ast yea . t s co t ues to be a issue. based on targets than bonuses are and as a result a clear explanation of how to achieve a pay rise may be difficult. Similar to last year middle management and above continue to be significantly more likely to year. but these may not be communicated. satisfaction with how organisations communicate has decreased from +25 in 2008 to ‐3 this year. or not communicated adequately.Future Pay rises • Mirroring the results from 2008 and 2009. next year. compared to a quarter who were explained how to receive a pay rise Pay rises are less likely to be rise. Reasons for the lack of explanation could possibly include: • difficulty in defining how pay rises are attributed: More employers provided an explanation as to what is needed to receive a bonus next year (59%). • state of t e eco o y: as last year. • 28 . • poor communication: objectives may be set. over two thirds (71%) of employees have not received an explanation detailing what they need to do to receive a pay rise next year. have received an explanation than junior managers and those with no managerial responsibilities (32% compared with 23% and 20% respectively). The uncertain economic climate makes it difficult for many organisations to predict where they will be. As later slides show. both financially and as an organisation. this continues an ssue. t t being the a explanation around pay decisions (47%).

Net Satisfaction 1 – Explanation for 2011 pay rises • • With a net satisfaction score of +58. the proportion of employees satisfied with their explanation of what needs to happen for them to get a salary/wage rise has remained the same since 2009 2009. • The decreasing scores seem to keep in line with overall dissatisfaction among the public sector. While net satisfaction has remained consistent in the private sector. net satisfaction among public sector employees has decreased from +47 to +35. h t however thi may not b surprising this t be ii due to the job cuts within the sector over the last few months • Base: All who received an explanation of what needs to happen to get a salary/ wage rise in 2011 *Caution: Low base size 29 Due to small base sizes the figures need to be treated with caution. . however net satisfaction continues to decrease as the size of the organisation increases with respondents in micro organisations more satisfied with their explanation (net +90) than those in large organisations (+49).

d ) As was reported in 2008 and 2009. 2010=187) • No Managerialresponsibility (2009=166.Net Satisfaction 2– Explanation for 2011 pay rises rises Allreceiving an explaination (2009=710. While satisfaction among men has remained the same. 2010=240) Men (2009=413. 2010=317) Since 2008. scores for women seem to have decreased slightly from +65 to +57 +57. down from +61 in 2009 and +52 in 2008). net satisfaction scores for middle managers has increased from +65 to +74 while scores for those with no managerial responsibilities are at their lowest (+47. 2010=301) 2010 2009 • Base: All who received an explanation of what needs to happen to get a salary/ wage rise in 2011 30 . Junior Managers (2009=172. 2010=761) 58% 61% 74% 72% 46% 51% 47% 61% 59% 59% 57% 65% 0% 20% 40% 60% 80% 100% • Middle managers and above (2009=326. however this is not surprising as they are significantly more likely than junior managers and those with no g managerial responsibilities to be told what to do to get a pay rise. 2010=460) Women (2009=297. middl managers remain th most iddle i the t satisfied.

Employees in the private sector are significantly more likely to think they will get g y y y a higher pay rise next year than are public sector employees (24% compared to 9% respectively). This figure has reduced significantly from last year when 67% expected a pay rise. public sector employees are significantly more lik l to l i ifi tl likely believe they will receive a pay freeze (49% compared to 29% in the private sector). year however figures for pay cuts have have remained consistent. • • • 31 Base: All working respondents (excluding owner/ proprietor) . compared to 25% last year. However. The expectation that employees will receive a better pay rise in 2011 than they did in 2010 has decreased since last years research (from 29% to 21%). Nonetheless.Pay Expectation in 2011 • Overall 58% of respondents expect a pay rise in 2011. however. figures have not shifted for employees who think they will get the same pay rise in 2011 as they did in 2010 with 30% stating this The likelihood that employees will receive a pay freeze has also increased significantly with 33% expecting this.

the average (median) increase predicted is 2%. Middle managers and above predict a higher pay rise on average of 3% declining 3%. who answered 3%. although 24% feel unable to predict the extent of the pay cut – caution has to be taken with these figures as the base sizes is very small. Employees who have been in their current job for over five years are less optimistic. when compared to those in the public sector who answered 2%. 32 I can’t predict the size h i I can’t predict the size 11%+ cut 11%+ rise 6 to 10% rise 5% rise 4% rise 3% rise 3% cut 2% rise 2% cut 1% rise 1% cut 6 to 10% cut 5% cut 4% cut • • • • Median 2% Median 10% Base: All expecting a pay rise next year (n=1819). Private sector employees are more positive about their projected pay rise. A significant proportion (35%) do not feel able to predict how much it will be. The average pay cut expected is 10%. answering 3% on average. in turn among junior managers and employees with no managerial responsibilities (2% each). compared to those who have been in their job between for less than a year.Predicted size of pay rise/ cut in 2011 • Of employees who predict a pay rise for themselves next year. or a pay cut (n=49*) *Please note small base size . with an average answer of 2%.

Cash bonuses bonuses .

h b f d 34 • • • Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme . Likewise. are a more appropriate way to reward their staff. compared to 14% of micro organisations). possible explanations for this could be that there is a possible upturn in the economy or organisations feel cash bonuses rather than bonuses. Private sector organisations are far more likely to have a cash bonus system in place than public sector organisations (39% compared with 10%). While there is no evidence. The proportion of employees who received a cash bonus in the last twelve months has significantly increased from 65% to 72% in 2010. Future waves will determine whether an increase in the number of bonuses is a trend.Breakdown of employee bonuses • Just under a third (31%) of respondents work for an organisation that has a cash bonus system (65% have not. pay rises. due to future economic uncertainty. larger organisations are also more likely to have a cash bonus system in place (37%. It then follows that private sector employees are more likely to have received a cash bonus (73%) in the past 12 months. and 4% do not know).

• 35 Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme *Caution small base sizes . Public sector employees continue to be least satisfied with their bonus however caution needs to be taken due to a small base size. while satisfaction among private sector employees remains consistent.Net Satisfaction 1 – Bonus • Net satisfaction rates are generally y lower the bigger the organisation – although caution should be taken due to the low base size of employees in SMEs receiving a bonus bonus.

Middle managers continue to be g y y y significantly more likely to be very satisfied (33%) than employees with no managerial responsibility (22). The net satisfaction score gap between men and women has decreased this year with women holding a net score of +66 and men a net score of +61. Future waves will determine whether or not this is a trend. While t tisf tion Whil net sati facti among middl iddle managers and above has remained the same. net satisfaction among junior managers seems to have decreased (+66 to +58) however this d 66 58) hi change is not significant. satisfaction is lowest among employees with no managerial responsibility – this continues to be the case in 2010.Net Satisfaction 2 – bonus • As was reported in 2008 and 2009. • • • Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme & who have received a bonus 36 .

A third (29%) of employees felt their bonus was in line with how much money the company was making. Just under one in five (17%) were satisfied with their bonus because it was more than they received last year. and the team (19%).Bonus (reasons for satisfaction) • Other than the state of the economy. indicating many employees assess their bonus on a key set of factors. the first year we asked this question. (19%) Nonetheless. all reasons given for being satisfied with the bonus were also given as reasons given for dissatisfaction. these fi th l th figures have significantly decreased since 2009. 2009 37 • • • Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme and received a bonus and were satisfied with it *Not asked in 2009 Top five reasons shown . A reflection of performance is an important reason for satisfaction – for the individual (38%). however this figure has decreased significantly since 2009.

Bonus (reasons for dissatisfaction) • The top five reasons why employees are dissatisfied remain as they were in 2008 and 2009 ‐ the size of the bonus not reflecting their performance being the primary factor. The next most cited reason for their dissatisfaction is that the bonus did not reflect how much the company had made (34%). and 18% felt it did not reflect how well their team had performed. dissatisfaction steams from a ‘grass is always greener’ sense that their bonus is lower than what they could get elsewhere. 38 • • • Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme and received a bonus but were not satisfied with it Top five reasons shown . One in five felt that their bonus was below that received by more senior y management. For 17%.

Among the 127 employees working for a finance organisation with a cash bonus system 79% received organisation a bonus. whereas 24% are dissatisfied). two thirds work for an organisation that has a cash bonus system in place.Bonuses in the Finance Sector • • • • Of the sample 193 employees who work in the finance sector. Satisfaction is high among those 100 employees who did receive a bonus (74% are satisfied. The top three reasons for satisfaction in relation to the bonus received are: • It reflected how well I had performed at work • It reflected how much money the company has made made • It was more than I received last year • Among the 24 respondents who were not satisfied with their bonus the top reason for their dissatisfaction was: • It did not reflect how well I had performed at work • Among the 79 respondents who received an explanation for why they received the bonus they did the top three reasons were: • My individual performance • How well my organisation has done overall • My team’s performance 39 .

Communicating changes in bonuses .

The teams performance continues to be considered a less significant reason with 30% stating this. 21% said their organisation did not explain and 2% do not know. with the most popular being organisational (55%) and individual performance (53%). The Th explanations given f the size l i i for h i of bonus reflect those reported in 2008. • • • 41 Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme and received a bonus and an explanation *Not asked in 2008 . While there has been a 5 percentage point change since 2009 and 2010 regarding organisational performance this difference is not significant. Larger employers seem more likely to highlight the performance of their team than those working in in SMEs (33% compared with 23%).Bonus explanation • Over seven in ten (77%) of respondents said their organisation explained to them the reasons behind the size of their bonus.

and middle managers and above. as to what they need to do to get a bonus next year. Bonuses are h h ld h do in d i i more likely to be based on targets which are easier to measure than individual performance and as a result it can be easier for employers to provide explanations of how bonuses can be attained. y p y unable to predict the market and plan ahead. this may be due to the difficult economic climate in which employers are y . although there are higher rates of explanations among newer employees (who have been at the organisation for less than a year). There are no statistically significant patterns who is more likely to have received an explanation. respondents are satisfied with the explanation they received.Future Bonuses • Similarly to 2009. As with pay rises. With a net satisfaction score of +56 overall. • • • 42 . 59% of UK employees have been told what they need to do in order to receive a bonus next year (61% had been told in 2009). Yet a significant proportion of employees (40%) were not provided with an explanation. This figure is 34 percentage points higher h hi h than those who were told what to d i order to receive a pay rise.

Predicted size of bonus in 2010 • Similar to last year a quarter of respondents (26%) do not expect a bonus this year. ll. Overall 62% expect a bonus next year. and of these 14% think it will be lower and 20% higher than this year. • • Base: All working respondents (excluding owner/ proprietor) whose employers have a cash bonus scheme 43 . while 28% expect their bonus to be the same size as last years. and male (22% compared to 16% of women). Employees who expect a higher bonus next year are more likely to be new employees (36% who have been at the p y organisation less than a year).

How employees would like to get get paid .

Base: All working respondents (excluding owner/ proprietor) 45 . ƒ Public sector employees also highlighted length of service as a basis on which they would like to be paid – slightly less important for private sector employees. mentioned by at least a third in both the private and public sector.On what basis would you ideally like to be paid? ƒ Within the private sector the majority (60%) would like to be paid based on how well they p perform while in the public sector the majority (52%) would like to be paid on the basis of inflation/ cost of living – this shows no change from 2009 2009. ƒ Similarly linking pay to how well their organisation or team/ department performs is si ifi ignificantly more important to l private sector respondents than public sector respondents. ƒ Experience is also an important factor.

Measuring performance .

Satisfaction with organisation’s ability to measure performance Net satisfaction with measuring YOUR Performance All (n=3083) Private Sector (n=2278) Public Sector (n=549) Middle Management and above (n=997) Junior Managerial responsibilities (n=799) No Managerial responsibilities (n=1199) Men (n=1771) Women (=1312) +7% +11% ‐12% +22% ‐1% ‐1% ‐1% +6% +8% Net satisfaction with measuring TEAM Performance +9% +15% ‐11% +22% +2% +3% +7% +11% ƒ ƒ Net Satisfaction scores are more or less similar when judging organisations ability to measure individual performance. 47 . those working in the public sector are more likely to be dissatisfied with a negative net score of ‐12 compared to ‐11 respectively in private sector. While private sector employees are satisfied with the way their organisation measure both their performance and their teams performance. as well as their team’s performance.

Employee feelings .

Overall. 49 Base: All working respondents (excluding owner/ proprietor) . net scores have declined since 2008. this could be an indication of how g . Respondents are significantly less likely to feel valued as an employee now than they were last year. Likewise middle management and above feel far more valued that those with no managerial responsibility (+28 compared with +2). • Although there is no evidence. recent public sector job cuts are affecting the workforce. said they have made the same amount of effort. Respondents are also significantly less likely to feel motivated by and proud of their organisation.How do you feel? • The h Th chart shows net agree scores – the proportion who agree h h i h with the sentiment minus the proportion who disagree. than in past years with net agreement scores decreasing for both. in particular public sector employees who had a negative net agreement score of ‐1 compared to private sector employees (+12). so that employees in micro organisations report the highest net levels of f li f feeling valued ( 41 compared with th l d (+41 d ith those in l i large organisations +2). Communication with organisations clearly seems to be an issue with net agreement scores reducing from +25 in 2008 to ‐3 in agreement 3 2010. particularly in relation to communication. • Interestingly when asked whether their organisations made more or less of an effort to communicate the reasons behind its pay decisions since 2008 only 7% said their employer has made less of an effort One in five said their employer has made more and 47% effort. • • • • • The likelihood that employees feel valued declines as the size of the organisation in which they work increases.

Lifestyle .

they expect standard of living to rise in the next 12 months. y y were to state that their standard of living will decrease in the next 12 months – 46% of those aged 45 to 54 said they expect their standard of living to fall in the next 12 months compared to 12% of those aged 18 to 24. Just over one in six find themselves short ‘more often than not’. Only 17% said that their standard of living is higher now than it was 12 months ago compared with 36% who said they were worse off. • Nearly half (47%) stated their standard of living is the same compared with 12 months ago. The labels of negative and positive refer to outcomes – for example positive outcomes are that their standard of living is higher now than 12 months ago. It can be seen that the negatives outscore the positives. • Base: All working respondents (n=3083) 51 Nearly half of all respondents struggle to make it through to the next pay day without finding themselves short of money.Better off? • The chart shows results for three indicators of whether respondents felt better or worse off and if they expect things to improve. Similarly. the more likely they gy p . • Interestingly the older the respondent. 36% expected their y y. This figure is the same for those who believe their standard of living will remain the same in the next 12 months months. . • • 45% of public sector respondents said they expect their standard of living to fall in the next 12 months compared to a third of private sector respondents. months they never find themselves short of money money. p standard of living to fall in the next 12 months.

Cutting back to make ends meet • Only 22% of respondents have not had to cut back on spending to make ends meet in the last six months. A similar proportion have cut down on going out while just over four in 10 have spent less on shoes and clothes. DVDs Christmas spending) in the (holidays DVDs. • Men were significantly less likely than women to use money from savings or investments. take on another job in addition to the one they are currently doing or ask friends and family for financial help Base: All working respondents (n=3083) 52 . Respondents don’t expect things to improve much in the near future. electricit and oil. The top ten cutbacks that the remaining three quarters of cutbacks remaining respondents have made are shown in the chart. 56% intend to make changes to lifestyle spending (holidays. About half of respondents have cut down on nice to have things such as DVDs and jewellery. • Women were significantly more likely than men to have spent less on shoes or clothes and ‘nice to have things’ • • • Three in 10 have spent less on birthdays and Christmas and o er one in fo r have cut back on gas electricity over four ha e c t gas. next six months. Four in 10 (38 per cent) expect to make financial changes including increasing their overdraft. stopping pension payments and living off savings and half say it is very likely or quite likely that they will cut back on day to day living expenditure in the next six months.

Again. p of living/ inflation. Employees are optimistic about 2011 with 58% expecting a pay rise and 62% a bonus. What is clear from this year’s research is that the public sector is clearly feeling the cuts – with decreasing satisfaction scores around pay and bonuses it seems the actions taken by public sector employers are now being felt by their workers. Likewise. p y g y 53 • • • • • • • . The proportion of employees receiving a bonus has increased from 67% to 72% in 2010.Conclusion • Since the 2008 research the proportion of employees receiving a pay increase has dropped eighteen percentage points to 49%. E l ti i ti b t 2011. with half of these reporting that it reflected how well they had performed at work. Although among those who were dissatisfied with the pay rise. Future waves will determine whether this is a trend trend. and felt it kept pace with cost y y ). More employees are dissatisfied with their pay freeze than they are satisfied with it (net ‐26). net +63% are satisfied with the size of their bonus. the fact that it did not keep up with cost of living/ inflation was a major concern. figures are decreasing. particularly around communication where the score has gone from +25 in 2008 to ‐3 in 2010. Four in ten (44%) of employees received a pay freeze in freeze the last year. ith ti i d While employees still feel proud and motivated. cost of living/ inflation is cited as the main factor for their dissatisfaction. Nearly two thirds were satisfied with their pay rise (net +61).

Regional Analysis .

the differences are not statistically significant. Although figures differ between the three regions. y g Just over four in ten received a pay freeze in London (44%) and Wales (47%) and over a third in Scotland (36%).Regional Breakdown of Employee pay… ƒ Approximately half of respondents surveyed in London (52%). ƒ 55 Base: All working respondents (excluding owner/ proprietor) who have been in their job for more than a year . Scotland (58%) and Wales (47%) received a pay increase.

With a negative net satisfactions score of ‐46. Wales & Scotland • Due to small base sizes within Wales.Net Satisfaction – London. therefore these figures have also not been reported. fi l t t d Respondents within London were significantly more likely to be satisfied with their pay increase than those within Scotland (61% compared with 47%) and as a result have a higher net satisfaction score. In addition. respondents within Scotland were not satisfied with their pay freeze: • Respondents within London were also R d t ithi L d l dissatisfied but had a lower net score of ‐ 18. Pay Freeze=80/ London Pay Increase=174. only figures for London and Scotland y g have been analysed. • • Base: All working respondents (excluding owner/ proprietor) who have received a pay rise in the last 12 months (Scotland Pay Increase=137. Pay Freeze=154 56 . a small number of respondents received a pay cut in these regions.

For respondents in Scotland. 57 . their pay reflecting how well they performed at work was also a main reason for satisfaction but so was the fact that the increase kept pace with inflation/ cost of living.Reasons for satisfaction about pay increase size – London & Scotland Top 5 Reasons It reflected how well I had performed at work My pay is at or above what I could get elsewhere for doing the same job It kept pace with increases in the cost of living/ inflation It was more than I had received last year It reflected the state of the economy London (n=141) 29% 18% 17% 17% 16% Top 5 Reasons It kept pace with increases in the cost of living/ inflation It reflected how well I had performed at work It reflected the state of the economy It was more than I had received last year It reflected how much money the organisation had to make an award Scotland (n=101) 25% 24% 23% 19% 14% ƒ ƒ The top reason for why respondents working within London were satisfied with their pay increase was because it reflect how well they had performed at work (29%) followed by their pay being above what they could earn elsewhere for the same job (18%) (18%).