Employee morale and retention, in addition to company culture, are at risk of being damaged if pay rises are delayed according to new research from global talent solutions business, Robert Walters, as it reveals nearly half of business leaders have seen an increase in employee turnover after delaying salary increases.
The current economic landscape is proving challenging for employers, with many having to make difficult financial decisions. To control overheads, some have deferred or scaled back salary reviews, but this is proving to be costly. In fact, 36 per cent said that doing so has led to disengagement within their teams.
The survey also reveals a widening disconnect between employer decisions and employee expectations. Among UK employees who didn’t receive a pay rise this year, 63 per cent said they are now actively looking for a new job. Even among those who did receive an increase, 61 per cent said it was lower than expected.
“Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year. In fact, 64 per cent of business leaders said budget constraints and business performance were the top reasons for delaying or reducing pay rises.” says Chris Eldridge, CEO of Robert Walters UK&I.
“Our research shows that these decisions, while understandable, are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects.
“There’s a clear message here: even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. And with AI tools streamlining the job application process, employees have more opportunities than ever to explore new roles.”
What can employers offer instead?
Beyond pay, Robert Walters advises employers to think creatively about what they can offer, including meaningful career development, flexible working arrangements, and internal mobility pathways.
Sinead Hourigan, global head of CX, commercial and customer experience at Robert Walters, comments: “This is where salary benchmarking and market insights become so important. Workers who haven’t seen a pay rise may be planning to discuss salary in their mid-year reviews, and employers will need market data to communicate credibly, demonstrate fairness, and manage expectations.
“We’re seeing more employers ask how they can retain their best people when pay increases aren’t on the table. When salaries are constrained, culture and communication matter more than ever. The organisations that succeed will be those that balance cost control with a thoughtful, market-informed approach to employee engagement.”
