New benefits survey highlights challenges for UK companies

EMPLOYEE BENEFITS

New benefits survey highlights challenges for UK companies

According to a recent survey from thomsons online benefits, most companies do not have a written reward strategy, almost half are not aware of how much they are spending on benefits and over 40% believe communication of their benefits package to be poor.

Based on responses from 522 organisations in the UK, the survey also looked at benefits administration, pensions, salary trends and the extent of flexible benefits and salary sacrifice.

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The picture is not quite as confused as it may seem, however, with over a fifth of companies saying their staff valued benefits “highly” or “quite a bit”, while a further 35.2% of organisations said employees valued their benefits “a bit”.

In addition, it seems that most organisations are keeping up-to-date with current legislation with over 80% having reviewed their reward policies to comply with the 2006 age equality regulations.

Flexible benefits on the increase

The majority of companies had a standard benefits package in place with life assurance, pensions and private medical insurance the most popular benefits provided. But the survey also shows that flexible benefits are on the increase with a detailed section illustrating that 15% of companies either had or were implementing a scheme.

Among the most popular benefits to “flex” were childcare vouchers, dental insurance and holiday entitlement.

Nearly a fifth of surveyed organisations are considering implementing this type of approach in the future.

Payroll spend

Just over a half of companies were aware of the cost of their benefits packages as a proportion of payroll, with 13.5% of the whole sample stating that benefits amounted to between 15% and 25% of payroll costs.

In contrast, around one in 20 companies said benefits made up between 26% and 50% of payroll costs, while just over a quarter of companies said costs were worth 10% or below. 

Future challenges

Looking ahead, the two most pressing challenges for the future mentioned by just over 40% of companies were to improve communication of the benefits package and to get employees to value what they receive more. To achieve this, it seems that most, around 80%, of companies review their offerings once a year.

Other findings

Other results from the survey included:

Total reward statements

• Nearly a quarter of respondents offered total reward statements, with a slight majority being paper-based and the remainder web-based. In addition, just over 30% of companies plan to implement them in the future.
• By far the greatest benefits of total reward statements has been greater understanding and appreciation of benefits on the part of employees, both mentioned by around 60% of companies.

Reward strategies

• Of the 36% of companies that did have a written reward strategy in place, the majority, over 85%, were designed by senior managers or the board.

Bonuses

• In addition to salary rises the majority of employers, 58.2%, intend to pay their employees bonuses over the coming year.
• Around four-fifths of payments linked to either company or individual performance. Other measures were business unit or team performance, while awards linked to project completion were relatively common.

Administration

• Just over a third of employers still used a paper-based system run by their own employees for the administration of benefits.
• In contrast, about a fifth used a third-party benefits administrator, while a similar number used HR software for day-to-day management.

Salary sacrifice

• As far as salary-sacrifice initiatives were concerned there were mixed feelings. On the one hand, half of respondents felt unaffected as a result of the ending of the home computer initiative while another third felt less confident about the future of other salary-sacrifice benefits.
• In total, 59% of companies had salary-sacrifice initiatives in place while 15.3% intend to introduce them in the next 12 months.

No benefits in place

• For the 7.5% of companies with no benefits in place, apart from holidays, the main reason given was either that they were too costly or there was no budget. This was the case in nearly a half of such firms.
• More surprisingly, 28.2% of companies said there was a lack of demand from employees, while 23.1% said benefits were not appropriate to company culture.

A final word

Highlighting the growth in popularity of benefits schemes the report says: “Since the inaugural Employee Rewards Watch survey in 2004 there has been a marked increase in companies not only offering an employee benefits package, but also the numbers who are considering, are in the process, or have already implemented a flexible benefits scheme.”

Want to know more?

Title: Employee Rewards Watch Report 2007, thomsons online benefits.

Methodology: A sample of 522 organisations was surveyed by thomsons online benefits between October 2006 and December 2006.

Availability: To request a copy of the report online go to www.thomsonsonlinebenefits.com/Employee-Rewards-Watch-results

thomsons online benefits was established in 2000 with the stated aim of “bringing in new, cutting edge employee benefit solutions”. They provide traditional consultancy and HR-related web technology including “Perquisite”. For further details visit www.thomsonsonlinebenefits.com