Lack of benefits communication costs UK £2.7bn

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. 

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“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.”