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61% of UK companies regularly award promotions without salary increases

40% cite salary freezes currently in place as primary reason

Deferred bonuses, flexible hours and holidays awarded in place of pay rise.

More than six in 10 (61%) senior HR executives report that their organisations regularly award promotions to top performers without giving commensurate salary rises, finds new research. The most common reason given is that organisations have a salary rise freeze in place (40%) but companies and their employees also recognise that promotions can act as positive incentives in the absence of available funds.

The survey queried 200 senior human resources executives about their hiring and remuneration plans for the first half of 2012 and was commissioned by OfficeTeam, a division of Robert Half, the worldwide leader in specialised recruitment. Conducted by an independent research company, results were stratified by region, company size and company type.

When asked why they give promotions without salary rises, HR directors said that they would instead offer flexible working (39%),additional leave (28%), performance bonus (25%) and/or a deferred salary increase once the person had proven themselves in their new role (20%).

The proportion of companies citing salary freezes as their main reason for awarding promotions without rises was much higher in the UK (40%) than in Continental Europe (22%), helping to explain why promotions without rises are more common in the UK (61%) than Europe (47%).

Phil Booth, Director, OfficeTeam said: “Our research finds that work-life balance is more highly valued in the UK than in other countries around the world: employers and employees see alternative benefits to salary rises, such as extra holidays, more flexibility or deferred performance bonuses as valid ways to incentivise employees in difficult economic times. Employers are asking their teams to take on more responsibility but don’t necessarily have the funds to reward them financially. They recognise that a promotion with additional leave or flexibility is a valid alternative, as nearly three in four (72%) UK HR directors worry about losing top employeesin the coming year.”

However, OfficeTeam warns that while promotions without rises in salary can be an incentive, they could also lift top performers into employment brackets that enable them to seek more senior roles with other companies. And from an employee point of view, it’s important to balance all elements of a employment package, including salary, benefits, holidays and flexibility when considering career choices.

Booth continues: “Every person is different and so are their views on what’s important in their remuneration and benefits. While companies may be quick to increase salary in boom times, we’re currently seeing a much stronger emphasis on other forms of compensation including deferred raises and bonuses as well as flexible hours and extra holidays. It’s even more important for companies to stay in close contact with their valued employees to understand their motivation and what will encourage them to stay.”

Speaking to a recruitment consultant can provide insight into industry standards for financial and non-financial benefits, and help position an organisation competitively in the marketplace.


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