Reward: A review of 2023 and look ahead to 2024
There have been huge pressures on HR this year, as demand increases and, in some cases, budgets remain flat or contract. This has been especially true in reward and benefits teams.
Businesses are trying to mitigate the cost-of-living crisis from a pay perspective and deal with a significant change in compensation regulations as it applies to financial services. Benefits teams are working really hard to ensure their array of corporate benefits make a real difference to employees and that they also remain relevant and cost effective in a changing economic landscape where renewal prices rise and employee financial circumstances change.
In addition to these pressures, we have also seen a fundamental shift in the application of AI in the HR workplace, with early adopters hailing this technology as a critical time-saving tool.
To address some of these issues, I wanted to reach out to my trusted network and get their take on what, for them have been the key milestones that most resonate as they look back on 2023.
Lisa Woolford
Head of Reward, Fremantle Media
“In the whirlwind of 2023, change stole the spotlight, powered by the impact of war and inflation that made ‘business as usual’ feel like ancient history. Adaptability became our secret weapon, with reward professionals flexing their creativity—restructuring incentives, unveiling new initiatives, and triumphing in the face of constant evolution.
Enter the game-changer: AI took the spotlight, transforming the rewards landscape at warp speed. Picture personalised benefits and seamless processes—the magic of AI at play. The heroes in this saga? None other than our visionary Reward Leaders championing AI integration, paving the way for a future-forward rewards strategy. As we navigate the road ahead, the lessons of 2023 – sprinkled with innovation, inclusivity, and a deep understanding of our dynamic workforce – illuminate our path toward continued success and excitement.”
Michelle Jones
Senior Benefits Manager, L’Oréal
“It doesn’t all have to happen at once. It’s easy to get carried away, run your gap analysis and want to solve all the problems all at once. But plan designs take time to be considered, contracts take time to be drawn up, comms take time to be written and perhaps most importantly, benefits take time to be embedded. You’re likely not serving yourself or your stakeholders by rushing things through.
Network, network, network. Your existing network are (hopefully) great but if you find yourself in an industry you haven’t tackled before, implementing a benefit you don’t have experience with, or just need a sympathetic ear, reach out. Someone else will have done it, or know someone who has, and that insight can be game changing.
For many, this year has seen an increased focus on wellbeing but with cut-back budgets. Get smart – pin down every provider and find out if there’s any added extras that come with your existing plans, then market them as if they’re standalone. We’ve discovered our life insurer provides a dental advice, guidance and prescription app which we’ll advertise alongside our dental benefit. Similarly, another risk insurer provides complimentary access to a health app giving our employees access to a digital GP, health checks, nutritional consultations and talking therapies. These additions genuinely make a difference to our employees and come at no additional cost.”
Dedar Mahal
Senior Reward Manager, Commonwealth Bank of Australia
“2023 has rounded off an exceptional year in the financial services regulatory reward sector. Not since the inception of CRD IV nearly ten years ago, has there been as much media scrutiny and far-wide public debate on compensation in the financial services sector.
From a regulatory reward perspective, a key focus for UK financial services firms will be how to navigate the removal of the bonus cap. What are the regulators’ aims with the removal of the bonus cap? The regulators are aiming to make the remuneration regime more effective by allowing firms to increase the proportion of compensation subject to risk and performance assessment, which should give firms more flexibility to make adjustments to variable compensation.
Furthermore, the regulators hope that a larger proportion of Material Risk Taker’s compensation is in the form of variable remuneration which will also be subject to deferral rules as well as malus and clawback provisions. Currently, with many firms providing Role Based Allowances (RBAs), a large proportion of MRTs’ compensation is in the form of fixed pay which is not typically subject to malus and or clawback. Therefore, arguably, the implementation of the bonus cap has inadvertently created the need for a compensation vehicle which effectively bypasses firms’ ability to malus or clawback in instances of bad behaviour.
But how to remove or reduce RBAs? With RBAs being fixed pay, firms will find it tricky to reduce or remove these as these are contractually agreed upon and based on an individual’s role. Furthermore, if firms decide to phase these out for example by not granting RBAs to new joiners, they must give consideration to the gender pay gap and equal pay.
Lastly, whilst the bonus cap is removed for UK MRTs, it will still be in place for MRTs in firms’ European offices. Will firms want to create a variance in compensation mix for comparable employees? Firms will need to carefully assess their next move as there may well be a first-mover disadvantage in changing the bonus cap and or altering their MRT pay mix. Firms with December or March year ends will be amongst the first to navigate this. Therefore, many firms will be closely watching what the larger European and American banks end up doing in the coming months. So watch this space.”
I wanted to share these takeaways with you in the hope that they will help highlight some of the ongoing challenges faced by reward professionals as we move into 2024 and beyond and (hopefully) provide a source of material to help frame conversations in the ever-changing landscape of total reward.
We’ve also recently published our Frazer Jones 2023/2024 salary guide. Please feel free to explore to access the most up-to-date market data across all HR job families:
We are the only dedicated HR recruitment business operating on a global scale, with 14 physical offices across The Americas, Europe and APAC. As a result, we have unrivalled insights and market coverage as well as carefully curated networks that have been painstakingly developed over decades.
If you’re looking to add to your reward team, or considering a new challenge for yourself, please reach out to me for a confidential discussion.
