Employers use inexpensive perks to motivate staff

Organisations are using inexpensive employee benefits to tackle retention difficulties and the drop in year-on-year earning power, according to research published by Chartered Management Institute and Computer Economics Limited and Remuneration Economics (CELRE).

The research, published today (1 April), revealed an increase in holiday allowances, time off in lieu of work and greater training support as employers attempted to re-motivate staff in the wake of salary freezes and other cost cutting measures.

Average annual holiday entitlement, for example, is now 28 days, an increase from the 25 days reported last year.In addition the proportion of employers offering time off in lieu of extra work has risen to 62% in the past year. Many employers (89%) offer to pay exam fees for their staff and 71% also cover their book costs.

Mark Crail, managing editor at CELRE, comments: “Employers are reacting quickly to the tough economic climate, with pay awards falling and many salary reviews this year resulting in pay freezes. Employers now need to move beyond pounds and pence to look at the other incentives they can offer within the overall remuneration package to motivate staff without breaking the bank.”

The study shows that these difficulties come against a backdrop of the lowest movement in earnings for 5 years, amongst executives in the sector. Take home pay for employees across the HR sector has risen by 4.8% in the past 12 months, a drop from 6.6% for the same time, last year.

In real terms this means that the average executive in the HR sector is earning a salary of £36,285 per year.Outside of the sector, the top earners at ‘team leader’ level are in the utilities sector. Bringing home an average of £46,291, their annual income is £9,257 more than those at the bottom of the ‘pay league table’, in the engineering sector.

Lord John Eatwell, chief economist at the Chartered Management Institute, said: “It is encouraging to see employers looking for ways to avoid redundancy rather than adding length to the dole queue without a second thought. It shows that business is growing up because today, unlike in 1991, there seems to be more determination to retain skilled staff. Perhaps it is because employers are finally beginning to recognise that retaining competence is a far more cost effective option than rebuilding a talented team from scratch. However, this is at a cost, and the longer the recession goes on the more likely it is that employers will be forced to lay off staff – creating the possibility of skill shortages in the recovery.”

Staff redeployment levels across the HR sector have doubled in the past year, as employers try to find an alternative to redundancy. The 2009 National Management Salary Survey also reveals an ‘internal transfer’ rate across the sector of 8.1%, compared to 4.3% in 2008. The figure is also considerably higher than during the last major recession in 1991, when internal transfers reached 1.6%.

Employers in the HR sector are using internal restructuring as an opportunity to transfer core skills across their business. For example, 5.2% of function heads have been transferred over the past 12 months, compared to 1.2% being made redundant. With a view to the long-term, analysis of the figures suggests that employers want to retain junior staff, with 6.6% offered transfers compared to 1.3% facing redundancy.

Yet the survey, now in its 36th year, reveals that the majority of employers (61%) continue to struggle to retain key staff. Many blame the salaries they are able to offer (47%), job insecurity and the lack of career opportunities (both 46%) and internal bureaucracy (22%).