REWARD MANAGEMENT
Global recession piles pressure on reward professionals
Reward professionals are poorly equipped to respond to the challenge of the credit crunch, with less than one in ten organisations able to measure the return-on-investment obtained from their reward spend, according to a survey carried out by Thomsons Online Benefits.
Among the key insights revealed in the sixth “Employee Rewards Watch”, in which 523 organisations took part, are the following:
Reward strategy
Around one in three respondent (31%) do not have a reward strategy in place, and another third have a strategy that is “not documented”.
As many as 53% of respondents reported that the biggest issue they face in relation to their reward strategy is “pressure from adverse economic conditions”. Just under half cited “escalating costs to remain competitive”.
Measuring effectiveness
Whilst the vast majority of respondents (84%) report that their reward strategy “impacts directly on employee engagement”, nearly a quarter (23%) do not measure their reward strategy effectiveness in any way.
Six in ten respondents believe it is either “very important” or “important” to demonstrate a return-on-investment from their reward spend.
But over half of respondents either do not have the ability to demonstrate a return-on-investment from their reward spend (27%) or cannot do it very well (33%).
More than a third of respondents (36%) have not measured the success of their benefits package at all, while 12% do not know if they have. Less than one in ten respondents (8%) have measured any cost savings generated.
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Employee benefits
During 2009, 38% of respondents plan to review their health and wellbeing offering, 30% plan to introduce total reward statements and 28% intend to implement flexible benefits.
Respondents reported a wide range of advantages in having their current benefit package in place, with the majority citing that it assisted employee recruitment (65%), improved employee retention/turnover (64%), and increased levels of employee motivation (44%).
Salary sacrifice
Over the last year there has been a modest rise in the incidence of respondents operating salary-sacrifice options. Almost three-quarters of the survey sample (73%) have now implemented salary sacrifice, with a further 13% intending to do so in the next year.
Respondents with salary-sacrifice arrangements in place were asked if they had generated the level of tax and national insurance savings expected. But as many as 26% have not measured the savings.
Reward communication
Seven out of ten respondents (71%) report their employees do not know the full value of their total reward package and the majority do not currently offer total reward statements to their employees (70%).
Although 44% of respondents believe it is very important to brand their benefits package to maximise impact, only 13% have a specific reward brand. And nearly half (46%) do not gather information from employees about the impact of their internal communication.
A final word
“Despite the financial chaos that is affecting so many businesses, I firmly believe there are real opportunities today to positively rethink the shape of UK reward strategies. Against a background of pay cuts and unpaid bonuses, employers are going to have to think again about the best way to reward employees, based on a new set of behaviours and performance measures. Employees will need to be engaged all over again in order to help re-establish a working environment of trust and security which has all but been swept away in recent months.
“The current furore surrounding bonus payments, presents organisations with the chance to not only rethink their reward strategy and how it can be used to engage and motivate employees through the downturn, but to also ensure it is properly documented and that they have the tools in place to respond to future challenges by effectively measuring their return-on-investment.” - Michael Whitfield, chief executive officer of Thomsons Online Benefits.
Want to know more?
Title: Employee Rewards Watch 2009, Thomsons Online Benefits.
Availability: Copies of the survey are available on request, tel: 020 3328 4006, or visit:
www.thomsons.com/reward-news-knowledge/request-more-information.
Thomsons Online Benefits says: “Since our inception, our vision has been to transform employees' appreciation and understanding of their reward package and to remove the administration and communication headaches organisations suffer as a result of running them”. Further information can be found at www.thomsons.com.