The majority (78%) of reward professionals continue to be concerned about their organisation's ability to manage reward risks, according to research conducted by the Chartered Institute of Personnel and Development (CIPD).

In particular, employers are concerned about achieving the balance between affordability and the need to offer competitive reward packages, as demand for key skills picks up and employees’ appreciation of the value of total packages diminishes.

The Reward risks survey identified the top ten reward risks faced by reward practitioners and consultants:

  • Employees do not appreciate the value of their total reward offering.
  • Inability to increase pay levels due to budget constraints.
  • Line managers have poor understanding of reward.
  • Reward is not perceived as fair.
  • Inability to change reward practices quickly.
  • Employees do not understand performance and behaviour requirements.
  • Reward is not engaging for employees.
  • Incentives are not motivating.
  • Reward is unable to attract key skills.
  • Reward is not retaining talent.

    • Charles Cotton, rewards adviser at CIPD, said: “In the current economic climate, reward specialists are understandably concerned about budgetary constraints, but are also even more frustrated that employees do not fully appreciate the real value of the total reward packages that are already being paid.

    "Perceived fairness and equity in pay and reward also seems to be much higher on the list of concerns this year than it was in 2010.

    “Reward risks are clearly shifting in line with organisational and economic imperatives, but what the survey also highlights is some interesting international differences.

    "In the UK, the majority of rewards professionals are preoccupied with juggling costs and aligning rewards packages with changing business strategies and goals while maintaining positive perceptions of reward packages among employees.”

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