Employers expect to reward employees like Santa, not Scrooge

Despite current economic and political uncertainty, most employers forecast that they will increase or maintain current spend on reward for employees.

Christmas presents

The CIPD’s 2018 Reward Management Survey: Focus on employee benefits* finds a wide range of benefits being offered by UK employers. From traditional benefits such as the staff canteen, company car, season ticket travel loan or Christmas party to new perks such as nap rooms, paid leave to adopt a pet, fertility treatment or allowing people to take as many paid days off as they want.

Some benefits identified by our research have a direct cost for the organisation, such as providing private medical insurance or dental insurance, while others have indirect costs in terms of design, administration and communication. For example, bring your child to work day or an employee network to support diversity and inclusion.

The survey finds that despite the current economic and political uncertainty, only 3% of organisations predict that they will be forced to cut the amount of money they spend on staff perks in the next two years. Instead, most forecast that they will maintain the current spend (81%) or spend more (16%). In other words, employers are far more likely to expect that they’ll be behaving like Santa than Scrooge.

However, our survey does indicate that the amount of money being spent on staff benefits may not be delivering the results for which the business is hoping. It finds that 16% of respondents report that they do not always communicate to their employees the benefit package on offer. 21% admit that their current offering is not easy for their people to access, while 74% report that they do not assess the value they get spend on benefits.

Among those who do carry out a value-for-money assessment, 59% do so annually, while a further 22% do so every one to two years. The most popular measures used to assess the value of investment are the take-up of staff benefits (76%) and employee feedback (74%). Beyond that, there is a wide spread of methods; other main ones being leaver feedback (64%), retention data (58%) and employee survey data (57%).

Are you delivering value for money?

The CIPD believes that HR professionals have an opportunity to demonstrate their value to their organisation by indicating whether the amount of money being spent on benefits is delivering value for money, both for the employer and the employee.

They should be in an ideal position to help the organisation establish and articulate what it wants from its benefit spend in terms of employee behaviours to join, stay and perform. Existing and potential benefits should be compared with these objectives and expenditure calculated. Various people and business measures can then be used to help assess whether the benefits and the money being spent on them, are creating value for the organisation.

The survey also explores what effect an ageing workforce could have on people management. It finds that 52% of respondents expect that ageing will have an impact on their organisation’s existing people management policies and processes in the next five years.

The people management policies and processes that are forecast to change the most in response are how work, jobs and working hours are designed and organised (61%). Other policies and processes predicted to adjust the most are those associated with recruitment and selection (53%), physical and mental well-being (52%), and the management and development of staff performance (32%). 

While just 9% predict that how they manage pay levels, structures and progression will need to change, three times more (27%) think that they’ll have to adapt their existing approach to employee benefits, especially in the private services sector; possibly reflecting an issue where benefit costs are closely linked to the age of the workforce. 

Despite few respondents thinking that their organisation will need to change its current approach to pay, if work, jobs and hours are going to redesigned, this will have an impact on how jobs are priced. Similarly, if the management and development of staff performance is going to change, then this will have an impact on how employee contribution is valued. HR and reward professionals have an opportunity to start exploring with their employer how achievement will be defined in future, how it will be measured, developed and remunerated as the organisation, work and tasks adapt to take advantage of new demographic prospects.

To explore the pros and cons of segmenting employee benefits, read Charles' blog here.

* Survey findings are based on responses from 568 organisations. Data collection for the research took place between the start and end of May 2018. The survey was distributed electronically to senior reward / HR practitioners in the public, private and voluntary sectors.

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