By Matthew Gregson, Consulting Director,Thomsons Online Benefits
Since the financial crisis of 2008, trust in the UK economy has been in a state of recovery. Nevertheless while progress has been slow, we’re now seeing more encouraging signs of sustained growth. As a likely consequence of this, our recent research found that business optimism in the UK economy has than doubled since last year, rising from just 28% to 70% this year. In addition, over half the organisations surveyed pointed to an improved financial performance over the past 12 months.
However, whilst growing confidence in the economy is clearly a positive shift, this comes hand in hand with the threat of a looming talent exodus for many businesses. Whereas during times of financial instability workers have preferred the safety of steady, full time employment, as growth prospects improve, many employees now have the desire and confidence to look for new opportunities in the market.
In this new and improved economic climate, it is more important than ever for companies to devise new strategies to ensure employee satisfaction. Salary increases alone are no longer enough to retain and protect a company’s best talent. Employers now have to be more creative and take a more holistic view of total reward to show their employees their appreciation. On a positive note, our research indicates that HR departments across the country are rightly recognising this. The majority of HR staff realise that valued benefits will play a vital role in improving staff retention (84%) and engagement (68%) in the economic climate.
Nevertheless, what our research also made apparent is that simply offering employees flexible working, free cereal and early morning yoga is not enough; companies must also learn to demonstrate the value of these. Communication plays a far more vital role in this than most companies realise. Our recent research, which surveyed over 450 organisations representing more than 1,200,000 UK workers, found that employees reported only a 49% satisfaction rate in the benefits packages they received. At the same time, it found that the average UK employee under appreciates their benefits package by the equivalent of a luxury holiday (over £1,400) per year . For a typical company of 3,000 employees this equates to a substantial £4.24m negative return on benefits investment. In fact, the average worker believes the benefits they receive are worth roughly half the amount their finance and HR departments value them at.
Much of this is due to a lack of communication from employers; many companies simply don’t have the right technology or communication networks in place. In order for employees to engage with their benefits schemes and understand their potential value, employers need to make doing so simple, easy and even enjoyable. Technology plays a vital role in this. Employees are used to interacting with technology on a day-to-day basis and expect a ‘consumer grade’ experience that they can access anywhere on any device. Our research found that employees that had visibility of their Total Reward Statement estimated the value of their benefits package as 42% higher than those who didn’t. In a climate where employees are used to having immediate access to information, anything less than this can be frustrating and crucially deter their benefits interaction. To be engaging, employers need to think beyond what they communicate, to how their employees would like to consume this information.
Whilst communication is key, its effectiveness depends on understanding. Our research suggests that a lack of financial education within companies may be compounding the issue of benefits under valuation. Less than a third (29%) of employees feel they receive the right level of financial education, and 81% of HR professionals agree with them, recognising that too little financial training is provided to staff. There’s also internal confusion over who is actually responsible for delivering this training. HR professionals believe that intermediaries or employees themselves should be responsible, whereas financial directors tend to believe the financial team should shoulder this responsibility. If business leaders want employees to fully appreciate the monetary value of their reward packages, creating a clear strategy for financial education within their organisations would be a good place to start.
Companies need to work fast to implement new communications strategies and resolve these perception problems - it’s not the case that UK businesses are failing to offer comprehensive benefits, in fact, it’s quite the opposite. However, lack of internal clarity and financial understanding means they’re still at risk of losing their top talent. To ensure employees’ newly inspired optimism will not result in higher attrition and increased costs, HR departments must look ahead and implement practical measures to help increase engagement and ultimately drive the business forward.