Most UK workers struggle to see link between pay and performance

To make matters worse, the majority believe that the decisions made by line managers are unfair.

A majority of UK workers struggle to see the link between pay and performance at work, with most believing that the decisions made by their managers are unfair.

According to the latest ‘Willis Towers Watson Global Workforce Study’, a mere 37% of employees were able to see a clear connection between renumeration and how they had performed during the year. A mere two out of five felt that their line manager made fair decisions, while 54% believed their employer did a poor job of explaining its pay schemes.

Tom Hellier, the company’s GB rewards practice lead, said most of the evidence pointed to there having been no significant wage growth over the last year, which meant that employers needed to think more creatively.

“Without the current flexibility to expand the pay pot, employers are missing a trick by not using the resources they do have when it comes to rewarding employees more strategically,” he said. “Instead they seem to be spreading what they have more evenly than ever in an attempt to keep everyone happy rather than rewarding their best performers for going the extra mile.”

But a second study entitled the ‘Willis Towers Watson Talent Management and Rewards Survey’ also indicated that many employers were aware of their shortfalls, rating themselves as only mediocre in terms of delivering pay schemes effectively.

Nonetheless, 54% believed that their employees understood how their base pay was determined, while 58% thought performance was fairly reflected in pay decisions.

But Iain Nichols, head of the company’s data services division, warned that pay was still an important factor in attracting and retaining talent, even if real pay was declining in the UK and employers were likely to “have their hands tied for pay review budgets for a while yet”.

This meant they should take a leaf out of their European colleagues’ book and target what budget they had on high-performing individuals. “It is important for companies to get this right as pay will always be a key weapon in the war on talent,” he said.