A new survey has revealed that while the majority of managers are eager to reward their employees for their hard work, budget constraints are making it difficult for them to do so.
According to the Salary Survey 2025 by global talent solutions firm Robert Walters, 72% of managers expressed a desire to give pay rises to their teams in January, but 25% have been told by business leaders that there simply isn’t the budget to make this possible.
The survey also highlighted that a quarter of managers believe end-of-year bonuses are unlikely, with two-thirds of those that will be offering bonuses stating that the amounts will be far less than initially promised. For many businesses, the economic pressure is making it challenging to fulfill compensation promises, leaving managers in a difficult position.
Samantha-Jane Gravett, Managing Director at Robert Walters, pointed out that these tight budget constraints are forcing businesses to get more creative when it comes to employee retention. “Managers are caught in a tough spot – they recognise and want to reward their teams’ hard work, but tight budgets are tying their hands,” Gravett said. “This highlights the growing need for businesses to get creative in retaining top talent as we head into 2025 – from flexibility, wellbeing benefits, to more purpose-driven work and formalized career paths.”
The survey also revealed that employees are increasingly calling for more transparency in their companies’ business and financial updates. Over half of professionals (56%) are expecting pay rises in the new year, and 43% are still holding out hope for a bonus. However, when asked what their employers could improve on in the coming year, transparency was by far the most commonly mentioned, with 56% of employees citing it as a priority. In addition, faster communication on important matters and greater involvement in decision-making were also high on the list of employee expectations.
Gravett noted that employees are becoming more aware of the economic challenges faced by businesses, and they expect more honesty from their employers as a result. “Following what has no doubt been a year of difficult business decisions, employees will be demanding even greater clarity and transparency in 2025,” she said. “Employees are very aware of the economic climate, and with a slew of negative stories in the media around mass redundancies or job cuts – employees will want to know where they stand. Being honest and involving employees in their career journey will be a vital retention tactic.”
While it appears that pay rises may be delayed, there is some hope that compensation packages could improve in the latter part of 2025. A quarter of managers have not ruled out spot bonuses or mid-year pay rises, and 70% are optimistic that positive changes to compensation could follow if business performance in Q1 is strong. However, with 72% of professionals in the survey indicating that they are looking for new job opportunities in 2025, businesses face the risk of losing valuable talent if these promised pay rises and bonuses continue to be postponed.
Gravett emphasized that businesses need to act quickly and reassess their approach to pay reviews to avoid further employee dissatisfaction. “In addition to increasing non-financial related benefits (where possible), businesses should also revise their timelines on pay reviews so that they don’t leave their employees hanging in the lurch,” she said. “Where new year and mid-year pay reviews are the norm, businesses should consider quarterly pay or bonus reviews – particularly if they were unable to give the anticipated end-of-year bonus or pay increase.”
As we enter 2025, employers face the challenge of balancing budget constraints with the need to retain talent and maintain employee satisfaction. Transparent communication, creative benefits packages, and more timely compensation reviews will be essential for businesses to keep their workforce engaged and motivated in the coming year.
