Reward priorities in 2026

As we near the end of 2025, reward planning is likely underway for many organisations. From pay awards to benefits, employers typically offer reward in a variety of ways. To remain competitive, reviewing what is offered can be beneficial to ensure you are offering employees the most relevant and valuable support. Here, we explore the reward priorities of 213 UK organisations, as recorded in the Brightmine pay forecasts research, providing an insight into how businesses are planning to approach reward in 2026.

Financial sustainability

Affordability has been a central concern for many organisations, driven by increased operating costs, persistent high inflation and the ongoing pressure to fairly compensate employees amid the period of rising living costs. As we look ahead to 2026, this focus continues, with approximately one in 10 respondents identifying affordability as a key reward priority for the coming year.

However, affordability is rarely mentioned in isolation. Sustainability was a term used by some HR professionals in the latest Brightmine pay forecasts research, signalling a shift from short-term cost management to longer-term planning. Organisations are increasingly seeking to embed reward strategies that not only withstand the immediate cost pressures but also support future resilience.

This shift is reflected in pay trends data we collect at Brightmine. In 2023, pay rises peaked at 6%, the highest median settlement for more than 30 years, largely attributed to the cost-of-living crisis and high inflation rates. However, forecasts for 2026 indicate a more sustainable median pay bill increase of 3%, with organisations needing to balance the need for competitive pay rises with the realities of long-term financial sustainability.

One organisation noted that its priority for 2026 is to balance affordability with talent management, recognising the need to retain critical skills while maintaining financial health. This highlights the delicate balance between keeping the organisation in a positive financial position and strategic investment in people, appreciating that skilled employees are important to long-term organisational success.

Employee motivation

While affordability remains a key priority, organisations recognise that long-term success also requires investment in their people, supporting the idea that a happy and motivated workforce is not a luxury, but a business necessity.

Some organisations indicated that in 2026 they will place particular emphasis on rewarding high performers, aiming to maintain morale and productivity even as economic conditions remain fragile. With limited resources, many are having to prioritise initiatives that deliver the greatest impact, while ensuring that reward strategies contribute meaningfully to both employee experience and organisational goals.

One organisation shared the approach it is taking to motivate employees, stating that its priority for 2026 is “to reward high performance and review our performance management system to remove pay increases for underperformance”. Having a performance-based reward strategy, where compensation is based on contribution and outcomes, recognises high performers and can be an effective way to retain key employees, ensuring that limited resources are directed towards those who drive success.

Low-cost benefit offerings

Some organisations are looking to prioritise low-cost or cost-neutral benefit options as a way to support employees while managing budgets. Salary-sacrifice schemes, for example, are a popular mechanism as they offer mutual advantages, enabling employees to access valuable benefits while helping employers reduce their national insurance contributions, a particularly relevant consideration following increased costs for organisations in 2025.

This approach is especially common in the not-for-profit and public services sectors, where income generation is more constrained compared with profit-driven businesses. One not-for-profit organisation shared: “As a charity we need to manage our finances. We are trying to provide an extensive range of benefits, with minimal cost to the organisation.” This highlights a growing emphasis on creativity and resourcefulness in reward strategies, ensuring that a positive employee experience is maintained even when financial flexibility is limited. These initiatives can play a crucial role in retaining talent, particularly when pay awards are modest and employees are seeking value beyond salary alone.

Keeping pay competitive

Benchmarking pay continues to be one of the key priorities for 2026, having also been mentioned as a top priority for the past year. In a competitive labour market, offering salaries that attract and retain talent remains essential.

Most organisations reported benchmarking salaries against the median, with few indicating a plan to exceed it, likely a reflection of the ongoing economic constraints. Competitor pay within the same industry is the factor most cited to drive increased spend on pay awards in 2026, according to our latest pay forecasts research. This suggests that while organisations may not be aiming to lead the market, they are aware of the need to remain aligned with it.

For not-for-profit and public service organisations, where pay flexibility is often limited, competitive benefit offerings play a critical role in attracting top talent. These can include financial incentives such as generous pension schemes, or non-financial elements like enhanced annual leave, employee discounts and wellbeing support.

With Brightmine, you can benchmark both salary and benefits to ensure your reward strategy remains competitive and aligned with market expectations. Use Compensation Planning to compare pay levels and explore our Employee Benefits research to assess how your benefits package stacks up.