Professor Shaun Tyson: How important are benefits for motivation and retention?

The relative importance of pay and benefits in the wider context of the full range of HR policies varies, according to changing organisational and economic environments.

Recently, for example, the growth of the gig economy and the concept of ‘self-employment plus’ has raised questions about the significance of employee benefits. However, the reward package is still a critical element in both the contractual and non-contractual aspects of the employment relationship.

This raises the question of whether benefits continue to be an important part of the reward package, and if they truly help to attract and to retain talented people.

Benefits have long been regarded by some as irrelevant to motivation, as hygiene factors which only have a minor influence on an individual’s decision to stay or go, and are not likely to have any impact on individual performance.

However, benefits such as healthcare provision, pensions and life insurance for both the employee and their partner could be important, particularly given NHS waiting lists and the modest state pension. Similarly, offering convenient, subsidised, high quality childcare could be a game changer when attracting and retaining a talented person.

One policy solution that allows employers to cater to the individual needs of employees is to introduce flexible benefits, including salary sacrifice options, whereby individuals select a package of tax-efficient options from a menu, within a fixed budget, created using the purchasing power of the employer to suit employees’ needs.

Benefit packages need to be seen as a part of the overall employee value proposition (EVP) to attract and retain employees. This means HR policies should be consistent with an employer’s marketing strategy, conveying the image and supporting the narrative of an organisation’s espoused culture and leadership style. Benefit policies are tangible evidence of, for example, a sense of inclusion, a concern for wellbeing and a long-term investment in the employee’s future.

Professor Shaun Tyson is emeritus professor of human resource management at Cranfield School of Management

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