According to the CIPD, 75% of employers believe they won’t be able to meet their employees’ expectations for a pay rise in 2024.
So what can you do, when you want to reward your employees and retain their valuable skills but can’t afford salary increases?
If you have team members asking for a pay rise, but your organisation’s budgets can’t manage it at the moment, you’ve landed in the right place.
We’ll talk you through meaningful alternatives and benefits in lieu of salary increases, so you keep employees happy and rewarded fairly.
Typically, a good pay rise is considered 10% or more.
However, what is considered ‘good’ depends on many things such as economic stability, job market rates, industry, size, location, company performance and individual contributions to an organisation.
In the UK the average annual pay raise varies across sectors and organisational sizes, but generally falls between 4% and 6%.
Reports from the CIPD have shown that employers’ basic pay increase expectations over the next 12 months have fallen for the first time since Spring 2020 – which means employees might receive smaller raises in 2024 than they anticipated.
The CIPD provides a breakdown of what organisations are planning for pay increases in 2024:
Looking at data from the Office for National Statistics – between January and March 2024 – the average annual earnings growth for the public sector was 6.3% and for the private sector, 5.9% (ONS).
The tricky combination of rising living costs and restricted salary budgets is leading to a gap in expectations between employees and employers – which is likely to make retention and recruitment more difficult.
As businesses navigate through these challenges, finding alternative ways to engage and support employees will be very important.
75% of employers believe they won’t be able to meet their employees’ expectations for a pay rise in 2024. 
Take a look at your overall employee package.
While you may not be able to offer pay rises currently, can you invest in benefits that will enhance your employees’ wellbeing and/or engagement such as healthcare, cash-back schemes or added flexibility?
Costs associated with these benefits are often smaller than salary increases, but the impact can be just as big, giving your colleagues more value in their total compensation deal.
The first point may seem obvious – but it’s surprising how many employers don’t think to simply ask what their employees want.
Rather than guess what might help your colleagues, get managers to ask them in team meetings, or create a short survey to understand what benefits instead of a salary increase would really make an impact on their lives!
You may be surprised how easy (and time-saving) it is when you simply ask.
Flexibility is one of the most sought after benefits employees seek in 2024!
If you can’t offer salary increases, explore offering options such as remote working, flexible hours, or compressed workweeks.
Flexibility is super valuable to employees because it allows them to balance their work and personal lives much more effectively, and oftentimes reduces their day-to-day costs such as commuting and fuel expenses.
Summer Fridays, anyone?
Enhanced paid time off is a fantastic incentive to reward your loyal employees – in fact, sometimes employees prefer increased holiday allowances to pay rises!
Think about the day-to-day costs your employees are incurring, and explore what vouchers or allowances you could offer them to alleviate some of that burden.
It won’t cost as near as much as a salary increase, but you will still support the financial burden that comes with everyday life.
Think shopping vouchers, fuel or commuting allowances, cashback schemes etc.
Offering stock options or profit sharing gives employees a stake in the company’s success, aligning their interests with the company’s goals.
This approach can be really successful because it provides a direct financial incentive for employees to contribute to the company’s profitability and growth. It can also create a sense of ownership and long-term commitment to the organisation, enhancing overall engagement and performance.
Many people will argue that health benefits are a must when it comes to compensation packages – and we don’t disagree! So, take a look at your current health benefits, and see where you can add value or enhance benefits even more.
Do you include comprehensive health insurance, dental, vision, cover gym memberships and wellness programs? What about enhanced leave for sickness or mental health days?
These benefits are highly valued because they provide financial security and access to necessary medical care.
Bonuses are a great alternative to pay rises, because they are one-off payments that don’t affect salary structure, all while motivating employees to do their best.
If you set-out clear pathways with your employees for achieving a bonus – including timelines and KPIs – you’ll nurture a high-performance culture that recognises the hard work team members!
Employers that go beyond the basic statutory requirements are always highly regarded by employees.
Think about offering enhanced policies, such as extended maternity and paternity leave, bereavement leave, carers leave, sabbatical leave etc.
These policies show you truly care about your team members and how they’re able to manage and show up for their family responsibilities without compromising their careers.
Your employees are tuned in.
They will know if you try to cut corners or act disingenuously – and this can potentially lead to feelings of resentment and negativity around having transparent salary conversations, which nobody wants.
Ignoring the whole conversation about salary increases sends a message to employees that you don’t care about their financial wellbeing.
Employees are perceptive and will quickly notice the lack of communication, leading to feelings of resentment and ultimately increased turnover, as they will seek more transparent and supportive employers.
Handing out new job titles without corresponding salary increases is a terrible move that employees will easily see through.
It can come across as a superficial gesture, undermining trust and suggests that your company is trying to avoid addressing the real issue.
This approach will almost certainly lead to frustration, making your employees feel their true worth is being disregarded. In the long run, this can hurt team cohesion and productivity, so we recommend avoiding this completely!
Making promises of future salary increases that you cannot realistically fulfil sets up false expectations and can severely damage credibility.
Employees are not naïve – they will remember the promises you make and feel deeply disappointed and misled when they are not honoured.
Even worse, employees may start to doubt the sincerity of any of your future commitments.
We hope this was a helpful resource! If you’d like to learn more about Stribe surveys we’d love to talk.
About the author
Starting out her early career as a journalist, Jade Madeley is an accomplished content writer with 8+ years’ experience across business, personal finance, SaaS, human resources and employee engagement. Working with Stribe, she crafts insightful content that brings complex HR topics to life and drives meaningful action.
