Reward incentives for short-term employees

Incentives for short-term employees often call for a different approach by employers, says Ben Jones

Motivating permanent employees can be a tricky task for employers at any time, but a greater challenge can be how to give those on short-term contracts the impetus to work effectively and to schedule. This conundrum is particularly relevant in the current economic climate, with deadlines and budgets for huge projects such as the 2012 London Olympics and Crossrail construction under close scrutiny.

Temporary and contract workers are a key part of the labour market, giving employers flexibility and enabling them to acquire certain skillsets when required without permanent contracts. As the economy emerges from recession, more projects require input from skilled short-term workers, particularly in the construction, manufacturing, engineering and IT sectors. Sheila Sheldon, director of European operations at provider Michael C Fina, says it is vital to ensure staff on fixed-term contracts “feel part of the collective mix” and valued.

Send a gift to employee’s home

“Make the fact that you are rewarding them obvious,” she says. “Maybe use peer-to-peer recommendations, which reward an employee who has gone the extra mile by sending them a gift to their home, such as a barbecue or garden chair.”

Effective reward and recognition strategies can help to ensure a short-term employee is happy to return to work for a particular company for future projects.

Offering good employee incentives to this section of a workforce can also help to maintaining an organisation’s reputation. Kuljit Kaur, business development manager at P&MM, says: “I think the quality [of the employer] is what it comes down to. As a business, organisations want to uphold their reputation and to do what they have to do to ensure their employees deliver the company’s values through their work.”

One option for employers is to provide discounted retail vouchers. Kaur says these work well among construction, engineering and manufacturing workers as a replacement for loss of earnings brought about by the tough economic climate.

Balance between temporary and permanent staff

However, when implementing a reward strategy for contracted workers, employers must tread carefully, because failing to align it with the needs and desires of both temporary and permanent staff can cause problems. Tobin Murphy-Coles, director of flexible benefits and marketing at Lorica, says employers must be aware of the different types of perk needed by temporary and permanent staff. “Inevitably, contractors have their own set of challenges and drivers. This means, from a management standpoint, they are going to need some different carrots from those [employers] would use with permanent staff, while making sure both groups are aligned to the same objectives.

“However, organisations often make the mistake of setting up separate reward systems for contractors and permanent staff, resulting in a misalignment of objectives between the two groups.”

In the construction sector, for example, long-term benefits such as pensions or death-in-service schemes have historically been a priority for both employees and employers. But John Jory, director of B&CE, which provides benefits for manual workers in the construction industry, believes a more democratic approach to benefits would serve employers in this sector well.

“I would like to see those in the construction industry given a choice about what benefits they want and I think there are moves to go towards more flexible benefit options,” he says.

Flex can ease admin burden

Flexible benefits schemes can ease the administrative burden on employers, says Lorica’s Murphy-Coles. “With the increase in flex plans or online benefits schemes, the administration of reward and benefits is amalgamated into one process, making it simpler to offer the same reward or benefits to permanent and contracted staff.”

Having an effective reward strategy in place is one thing, but ensuring employees are aware of it is quite another.

“Communication is huge, it is massive,” says P&MM’s Kaur. “To get a message across, people can have access to computers via others in seniority or, where some people might not be as IT savvy because they work more with their hands, reward incentives can be communicated to them verbally.”

From a legal standpoint, it is also imperative employers understand the potential pitfalls of bringing in staff to work on a particular project. These include the Transfer of Undertakings (Protection of Employment) (Tupe) Regulations 2006, which stipulate that employees must have the same employment rights when they transfer from one organisation to another, for example as the result of a merger or acquisition.

David Yeandle, head of employment policy at manufacturers’ association EEF, says pensions, in particular, can be a thorny issue for employers undertaking Tupe arrangements. This is especially apparent if an organisation offers a defined contribution pension scheme, but staff are being ‘Tuped’ across from an employer that operates a defined benefit scheme. “There is a sharp difference in pension arrangements between the public and private sectors,” says Yeandle. “I have known companies that have shied away [from bringing people across] because of [differences in pensions]. It can prove very expensive and complicated.”

Danger of being over-cautious

Although employment law around pay, conditions and benefits is extensive – including a need to be firm on the distinction between third-party employees and direct employees – there is a danger of employers being overcautious, says Mark Hammerton, a partner in the employment team at law firm Eversheds. “As long as the employer has properly evaluated the risk, they just need to aim to offer a benefits strategy that keeps people motivated,” he says.

That would seem to be the heart of the matter, whatever the length of an employee’s contract. The harsh economic climate has seen benefits become an effective tool in lieu of salary rises when budgets are tight. “Incentives are a carrot to dangle,” says Kaur. “They help ensure targets are achieved and that customers are kept happy along the way.”

Any employer that is able to maintain this balance in workforce reward is likely to have a greater chance of success in completing projects on time and to budget.

Engaging short-term employees

One issue for organisations in charge of multi-agency projects to consider is what type of incentive strategy to offer short-term workers.

Angela Baron, adviser, organisational development and engagement at the Chartered Institute of Personnel and Development, says: “Employers need to understand the psychological contracts these people are working on. Even if someone is going to be there for only a few months, things can be done. [Employers] can offer a bit of training, so the employee’s skills are being developed. There are things they can do to make them feel part of the workforce.

“It is about both recognising [contract staff] will have different expectations and also being as fair as possible, so people feel valued.”

Employers should also be prepared to deal with the concept of fairness, says Baron. “[Employers] may have to deal with issues like resentment because often, consultants that are brought in get paid more than their bosses, or they may want access to flexible benefits,” she explains.

Case study: FirstGroup minds the skills gap

Transport company FirstGroup, which operates buses and rail franchises such as First Capital Connect, sometimes uses contract workers to fill skills gaps on large-scale projects.

While the company tries to treat all employees the same, where possible, some of its benefits do have service eligibility criteria attached. John Chilman, director, reward and pensions at FirstGroup, says: “We think it would be discriminatory to treat people differently, however, there are some things, like our buy-as-you-earn scheme, where staff need to have worked here for six months, so that would only apply to longer-term staff. For shorter-term staff, there are discounts and travel [perks].”

Chilman says pay is often a higher priority for contract workers. “We have had people who were on short-term [contracts] who went full-time and earned less on their basic salary but got more benefits because they were permanent.”

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