Employers and staff both need to see the true value of perks, says Matthew Craig
If employers are to get the full value from investing in pensions and benefits, staff have to appreciate their reward package, particularly the value it offers compared with obtaining the perks privately.
If not, benefits spend may be wasted, because it does not help employers attract and retain the best people, or make staff feel valued and rewarded.
Organisations may also want to assess the impact of their benefits on business performance. But, in reality, it can be hard for staff to quantify the value of different benefits in their reward package and for employers to assess perks’ business impact.
Tina Odell, pensions manager at Sony, says: “I worked at an organisation that had a very generous reward package. We had a one-page list of benefits and at the bottom was a bottle of champagne for an employee’s birthday. The impact that the champagne had, which was bought in bulk and probably cost £10 each, was huge.”
By contrast, putting a value on a pension scheme, which may cost millions of pounds to run, is far harder for both employers and employees.
Unexpected benefits
John Chilman, group pensions director at First Group, says employers that offer a good pension could benefit in unexpected ways. “We have had a massive increase in the take-up of our pension plan and have seen pension costs going up,” he says. “One benefit is that because we have less turnover of staff, we are having fewer vehicle collisions. This is because new drivers are more likely to crash. We are also spending less on training.”
Staff appreciation of benefits probably varies according to the industry sector and employee profile. Middle-aged staff in the financial sector, for example, will certainly bemoan the absence of a pension.
Ricky D’Ash, remuneration specialist at Equity Insurance, says: “There would be a knock-on effect on customer service. If an employer did not offer a pension, you would not get the right people.”
A number of other benefits are more likely to cause a buzz among staff, however. Chilman says staff at First Group were excited about a discounted travel scheme, offering cheap rail and bus travel. “They can use that for a day trip into London, whereas a pension is for something that is too far away,” he says.
Seniority and salary levels are also important to consider. Highly paid staff are likely to see PMI with family cover and a good pension scheme as minimum requirements. D’Ash says: “The lower down the workforce you get, the more likely staff are to be happy just to have cash and a salary rise, rather than a lot of benefits.”
Buy in bulk and save
But employers still have good reasons to offer benefits. For example, buying in bulk can obtain a better price than an individual employee could get. This helps to engage with staff over the value offered.
Duncan Brown, director of reward services at the Institute of Employment Studies, says: “For healthcare benefits, for instance, an employer can point out how much it saves, but few employers make any systematic attempt to do this.”
Brown points out that not monitoring benefit costs can become a problem with major items, such as pensions, where costs can be substantial, because there is then no reference point to illustrate the true value of the benefit.
Read more from: Employee Benefits / Scottish Widows Pensions Roundtable: engaging staff in pensions