From salary budgets and benefits packages to pay transparency expectations and employee demands, the pay and reward world looks completely different today than it did in 2015.
As we mark our tenth anniversary at 3R Strategy, we’re reflecting on the shifts we’ve witnessed—and sharing what we believe lies ahead.
Looking Back: The Last Decade
Salary Budgets: From Stability to Volatility & Back Again
A decade ago, annual pay increases were fairly predictable. Most organisations budgeted around 3% each year, and this remained fairly consistent. Then, the pandemic brought about immediate pay freezes as businesses faced uncertainty.
What followed surprised many: the so-called “Great Resignation” pushed salary budgets upwards as organisations competed fiercely for talent. Inflation soared, and businesses invested heavily in pay to attract and retain employees.
Now, as the dust finally settles, we’re seeing budgets return to familiar territory, between 3% and 4% annually, on average.
Evolution of Flexible Benefits
The approach most organisations were taking to benefits back then (offering the same package to everyone) is still the norm for many SMEs, but is slowly phasing out. Today’s employees expect flexibility and choice, with benefits tailored to their individual circumstances and priorities.
Mental health and wellbeing have moved from afterthoughts to central concerns. Where organisations once relied on basic Employee Assistance Programmes (which many employees didn’t even know existed), they now offer proactive mental health support and comprehensive wellbeing initiatives.
Perhaps the most visible change has been hybrid working. Before 2020, working from home was rare and often viewed with distrust. Now it’s standard practice, and for many, flexibility has become a key element of their reward strategy.
The Pay Transparency Revolution
A decade ago, transparency around pay was minimal. Most organisations kept salary information tightly guarded, and candidates rarely knew what a role would pay until late in the recruitment process.
However, research from Mercer suggests that whilst only 20% of organisations published salary ranges in job adverts in 2019, this figure is now sitting around 50%.
Legislative changes have driven much of this shift. Over 20 states in the US have introduced transparency legislation requiring organisations to publish pay information in job adverts, whilst the EU Pay Transparency Directive is starting to have similar effects across Europe.
But legislation alone doesn’t explain the transformation. Organisations are also discovering that transparency offers a competitive advantage. Candidates (particularly those from younger generations) increasingly expect to see salary ranges before applying.
In fact, Bamboo HR found that 78% of employees now actively track industry pay scales and job adverts in their sector, making them far more informed about market rates than ever before.
Looking Ahead: Future Expectations
1. Benefits Will Become Even More Personalised
The trend towards flexible benefits will continue, but we expect to see a shift towards truly personalised packages.
Rather than simply choosing between a few options, organisations are aspiring to provide employees with more choice and benefits tailored to their specific circumstances:
- Where they live (city centre versus suburbs)
- What stage of life they’re in
- Which generation they belong to
A cycle-to-work scheme might be perfect for some employees but irrelevant to others. Similarly, pension contributions matter greatly to those approaching retirement but may be less appealing to younger colleagues who prioritise more immediate impact.
2. Wellbeing & Work-Life Balance Will Be Non-Negotiable
Mental health support and flexibility aren’t going anywhere. In fact, they’ll become even more central to total reward strategies. Organisations that fail to prioritise employee wellbeing will struggle to compete for talent, as people increasingly refuse to sacrifice their personal lives for their careers.
3. ESG Will Influence Reward Strategies
Environmental, Social, and Governance (ESG) considerations are gaining importance, particularly in larger organisations.
We’re starting to see ESG priorities reflected in executive incentives and objectives, and this trend will likely continue. Shareholders and stakeholders increasingly expect organisations to demonstrate their commitment to ESG through concrete actions, including how they structure rewards at senior levels.
Recommendations for HR & Reward Professionals
Embrace Pay Transparency Early
Organisations that adopted transparent pay practices ahead of legislative requirements have avoided the scramble to comply whilst simultaneously gaining a significant competitive advantage.
Those still holding back should act now. Research suggests that around half of candidates won’t apply for jobs without published salary ranges, and this figure is considerably higher among Gen Z candidates.
Prioritise Flexibility as Part of Your Employee Value Proposition
For most organisations, though, flexibility has become the number one factor candidates consider—sometimes even ahead of pay. And for good reason. 76% say flexibility influences their desire to stay at an organisation, rather then looking elsewhere.
Flexibility is about being trusted to do your job and organise your own time without being micromanaged. So, if you offer this, make this prominent in how you present opportunities to potential employees.
For example, some organisations remain committed to five-day office working, and if that’s genuinely necessary for your business, you need to be clear about this from the start. Knowing this will likely limit your candidate pool, but will provide more relevant candidates.
Proactively Address Pay Equity
Equal pay audits may be carried out every 3-5 years. However, organisations should ideally be looking at pay inequity and dispersion more regularly than this.
With such a high percentage of employees now tracking market rates, and colleagues increasingly discussing pay openly, organisations can no longer hide behind large, unexplained differences. Such disparities create disengagement and erode trust, even when other aspects of your reward strategy are sound.
Focus on Skills & Contribution
According to Ravio, 82% cite career progression as a key retention issue.
Too many organisations still link pay progression primarily to length of service, applying blanket increases across the board. This approach fails to recognise how different employees develop their skills and contribute to their teams. Increasingly, talented employees discover they can only secure meaningful pay increases by moving to a new employer.
Instead, think about linking reward to skill development and contribution. When employees can see a clear path for progression within your organisation, they’re far less likely to look elsewhere. But remember, this isn’t just about climbing the ladder, it can be the responsibility of taking on new projects, or investing in skill development.
L&D is often the first budget to be reduced when finances tighten, but this is short-sighted. Investing in employee development demonstrates commitment to their growth and provides the skills your organisation needs to remain competitive.
Strengthen Employee Communications
Here’s something many organisations miss: perception of fairness matters more than what you actually pay people. You might invest substantial time, effort, and resources in creating equitable pay frameworks and conducting regular audits. But, if you don’t communicate clearly about how you make pay decisions, employees may still perceive the system as unfair.
Explain your pay philosophy. Help employees understand how roles are graded and how you set pay ranges. And recognise that different people prefer different communication methods.
Some will read detailed guides, others prefer videos, and many will have questions that arise during one-to-one conversations with their managers.
With this in mind, we must equip our managers with proper training. They’re the front line for pay discussions, and they must be able to answer employee questions confidently, rather than simply blaming or referring everything to HR. When managers can explain decisions clearly and consistently, trust increases across the organisation.
The Road Ahead
The last ten years have brought enormous changes to how organisations approach pay and reward. Transparency has shifted from unusual to expected. Benefits have become personalised. Flexibility is now fundamental. And employees are more informed and empowered than ever before.
For those willing to adapt, the opportunities have never been greater. Simply communicating openly about how you make decisions, and genuinely prioritising fairness and employee wellbeing will get you further than anyone could have gone in 2015.
