Failing to tell staff about the employee benefits on offer is costing UK employers £2.7 billion every year, according to research by Cass Business School.
The Money talks: communicating employee benefits research, which was commissioned by insurer Unum, used data from the government’s 2011 Workplace employment relations survey, and questioned both employers and employees from 2,680 UK workplaces.
It found that 64% of respondents have invested in good employee benefits, but do not tell staff what they are entitled to. As a result, they are no better off than organisations that do not provide the benefits at all.
For employers that fail to communication benefits, the cost of staff turnover and a loss of productivity totals almost £1.5 billion a year. This rises to around £2.7 billion when higher workplace absence costs for this group are included.
The research found that a typical organisation with 1,000 employees that offers good benefits but fails to communicate them spends £470,000 a year more on staff turnover and sickness absence than organisations that have comparable benefits packages, but have good communications practices.
The latter group also experiences lower sickness absence rates and staff turnover. Employees are more likely to remain with an employer if they know they will receive financial protection, which has become more important since the start of the recession and ongoing economic downturn.
Peter O’Donnell (pictured), chief executive officer of Unum UK, said: “[The research] shows that simply offering a great employee benefits package isn’t enough to promote wellbeing and financial security among employees.
“Our experience shows that contrary to employers’ beliefs, communicating with staff about financial protection and wellbeing initiatives, such as income protection and private medical insurance, leads to lower absence rates and reduced time off sick.
“Having an open dialogue between employers and employees about benefits builds a more productive and loyal workforce, and the bottom line benefits are evident.”
Nick Bacon, professor of HR management at Cass Business School, which conducted the research, added: “With the cost of living rising more quickly than many peoples’ income, and employers struggling for growth, staff retention is a vital issue.
“When organisations can’t easily increase salaries, they need to identify other ways to build staff loyalty, and a good benefits package does this.
“However, our research shows that even if organisations are offering good benefits, if they fail to tell staff what’s available, it’s no better than not offering these benefits at all.”
Benefits have proven to be less of a factor in employee retention when a company already has employees that are passionate about their job and their company. Gallup did a study on it a couple years ago and it showed passion, more than nearly any other factor contributed to employee retention and productivity.
Notre Dame’s Entreprenuership program did an infographic on it showing the cost related to the passion and retention of employees – Infographic – Employee Passion and Retention
We completely agree with Cass. When we repair the damage of failed benefits programmes managed by other providers, the absence of relevant and regular communication is almost always at the root of that failure. At a minimum, we believe that every benefits programme should have eight pieces of communication a year to drive home key messages through all appropriate channels. Hence we call our approach Communic8.
The communication of employee benefits is akin to the negotiation tactic of never offering a concession until you have first ensured that the other party is aware of the value of “your hand” and that, by conceding you are, in fact, ensuring that they appreciate the value of the concession.
In short, communicating the value of benefits helps to ensure that employees appreciate them.
But on its own, it won’t be enough to shift the engagement stats, especially if the quality of the comms isn’t decent enough i.e. cascade “message push” vs engaging, involving information-pull.
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