Approximately a third (31%) of UK employers give bonuses to employees with the lowest performance rating, according to research by Towers Watson.
The 2014 Towers Watson Global workforce study, which surveyed 32,000 employees including 1,863 in the UK, found that employers are spreading the pay pot more thinly and evenly than in recent years, consequentially widening the gap between pay and performance.
Just 39% of UK workers see a clear link between their pay and performance.
The research also found that UK organisations are not differentiating pay sufficiently for top staff.
While salary remains the top consideration for UK staff when deciding to join or stay with an employer, the research found that UK bosses are falling short on how they deliver pay programmes including basic salary and bonuses. According to the study, 44% of employees say their organisation does a good job explaining its pay programmes.
In addition, less than half (43%) of respondents believe their employer rewards them adequately for breakthrough ideas.
Carole Hathaway, global leader of Tower Watson’s rewards practise, said: “There is no escaping the fact that pay really matters to employees.
”Without the current flexibility to expand the pay pot, employers are missing a trick by not using the resources they do already have more strategically when it comes to rewarding employees. Instead, they seem to be spreading what they have more evenly in an attempt to keep everyone happy, rather than rewarding their best performers for going the extra mile.
It is especially surprising that a third of employers are awarding a bonus to employees with a low performance rating. This impedes their ability to reward top performers.”
According to the 2014 Towers Watson Talent management and rewards survey, which surveyed 41 UK organisations, less than half (42%) of respondents believe their staff understand how their pay is determined, and just 45% said that employee performance was fairly reflected in pay decisions.
The research also found that just a third (36%) of respondents thought their base pay programme is well executed.