A single cash award may seem the simplest method of reward, and one which allows employees to control what they do to benefit from their earnings, but benefits have become part of an expected package.
How does an employer offer benefits that employees want and value, compared with cash? How can they ascertain ‘need’, and ensure that a valued benefit is future-proofed?
There are, of course, things employers are required to provide by law, such as paid maternity leave. In these instances, the state has determined the need; the employer’s role is simply to meet it. But even the provision of statutory benefits can be enhanced when the employer does so in full knowledge of the employee point of view.
So, benefits management is at the core of regulating the employment relationship; front-line managers play the defining role here, having daily contact with people they supervise and being able to understand their evolving circumstances and needs.
An employer, therefore, needs to encourage and support front-line managers to assemble and report this knowledge systematically to inform policy, and its application to individuals. The process may also help in closing any perception gap between expectations and outcomes.
Academic commentary has grouped benefits into those that it is expected will trigger positive motivation among employees, and those for which their absence from the package could demotivate. Giving status-based benefits, like company cars, might motivate employees who value such provision, whereas, denying paid absence during sickness is likely to demotivate. Extending the example, line managers who ‘know’ the people they supervise should be aware of their health, perhaps a chronic condition developed over time, and why being ‘generous’ to someone who needs managed paid time off, could be the difference between keeping and losing a person with a key skill-set not easily replaced.
Finally, logic suggests employers that invest in employee benefits will measure the return. In practice, employers sampled for our Reward management report on behalf of the Chartered Institute of Personnel and Development (CIPD), published in November 2018, revealed only around one in four are making the attempt. Implying that, for many, such investment is an act of faith.
Plenty of scope remains, therefore, for employers wishing to get a competitive edge by working out how to weigh advantages against costs. As a minimum, organisations should regularly monitor take-up and gain employees’, and leavers’, feedback on perceived value.
Stephen J Perkins is emeritus professor at London Metropolitan University, and senior research fellow at the Global Policy Institute London