Last reviewed 11 March 2021

The shift towards hybrid working could signal a move away from traditional employee reward structures, including salary bands, the annual bonus and benefits, a report released by PricewaterhouseCoopers (PwC) predicts.

The Future of Reward report, which includes data taken from a series of studies conducted in the second half of 2020, sets out how performance management and the annual bonus are expected to change, highlighting how it could be replaced by a shift to team or project bonuses and peer recognition programmes.

The report, available at https://www.pwc.co.uk/services/human-resource-services/rewarding-your-people/future-of-reward.html, shows that almost two-thirds of 53 heads of reward surveyed have already made changes over the last year including reducing the number of ratings and increasing the number of check-ins with employees.

Meanwhile, half of the companies said they were reviewing the role of London weighting and regional allowances as part of their pay policy as they move to hybrid working.

Some companies operate a specific cash sum for those commuting into London while others have a higher salary band. Both are complex to remove but the report says this could result in a shift towards more national pay ranges, potentially with a flexible approach towards allowances and expenses for office set-up, wellbeing and less regular travel to the office.

Alastair Woods, Head of Reward & Performance at PwC, explained: “It’s clear that the pandemic has accelerated discussions about employee reward that are long overdue. Virtual working has resulted in many employers starting to consider the traditional pay models and accommodating individuals who may move from high cost locations”.

It is almost inevitable, he went on, that the reward landscape will change over time and will move from a one-size-fits-all approach to a more customised approach to pay.

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

These findings are interesting but not too surprising. The pandemic has arguably caused a drastic shift towards homeworking, meaning that we may see more employees happily accepting permanent homeworking arrangements over traditional perks.

However, it may be more difficult than it seems for employers to substitute bonuses for flexible working, depending on the type of bonus structure they have in place.