New Hay Group research: part 1 - benefit trends


New Hay Group research: part 1 — benefit trends

Under the spotlight today, the latest research from the Philadelphia-based Hay Group, one of the world's largest human resources consulting firms. Published annually, the report sets out Hay's reward philosophy and brings together a batch of recent studies carried out by the consultancy, providing numerous insights into a host of pay and benefits issues. A good deal of space is devoted to enumerating changes in benefits practice across corporate America.

Hay canvassed the views of 1,009 employers — both large and medium-sized — from a broad range of industry sectors.

Three factors shaping the new benefits package, says Hay

1 Economic conditions: an increasing focus on price competitiveness, cost control and economic return in an intensely competitive global market have been the main catalysts for companies to redesign benefits programmes to provide a better "return on investment".

Hay calculates that average benefits costs as a percentage of payroll declined from 26.1% in 1996 to 22.8% last year.

Low unemployment has caused companies to focus on cost-effective ways to attract and retain scarce talent. The trend is for employers to customise their benefits packages to give them the edge in the battle for scarce talent.

"In the benefits area the focus frequently has been to have one or more benefits that are unique to differentiate the company and send the message that the company cares about employees and their needs." — Hay.

2 Demographics: the US labour market is now generally composed of "Baby Boomers" and "GenXers" with very different needs from the previous generation, according to Hay. These employees are seeking benefits that suit their aspirations, lifestyle and family needs: not only flex, but also those benefits that give staff a better chance to balance work and family life, and — an emerging trend — "convenience" benefits.

"Simply stated, benefits have been redesigned to contain or reduce costs and maximise the value to employees by providing benefits that best match employee needs." — Hay.

3 Technology: the administration and communication of benefits is "evolving", says Hay, aided by advances in technology.

Differentiating your benefits

Put simply, organisations now want their benefits to "stand out from the crowd", says Hay. Hence the interest in flex, family-friendly benefits, broad-based stock options and convenience perks.

Sample findings from 1999 Hay benefits report:

  • full flex: now used by 22% of respondents (14% in 1990)

  • childcare: 87% (55%)

  • teleworking: 16% (14%)

  • flexible hours: 47% (38%).

Convenience benefits

Defined: "Services and products provided at the workplace. Their purpose is to enable employees to conveniently and efficiently perform 'errands', which in turn enables them to have more time for family and/or work." — Hay.

Organisations can provide these perks at minimal cost, yet they are widely appreciated, making them a very good benefit investment.

Sample findings from 1999 Hay benefits report:

  • casual dress days: used by 75% of respondents

  • personal use of company PC: 43%

  • personal use of internet/intranet at work: 29%.


Future prospects

So, what will the US benefits package of the future look like? Hay predicts:

1 Employers will continue to give more choice and flexibility via formal flex schemes and the introduction of additional benefits, perhaps on an "optional" basis.

2 Companies will look to offer lifestyle-friendly benefits, especially employee assistance programmes, childcare, job sharing and work at home.

3 In medium and large businesses convenience benefits will become much more prevalent — likely growth areas include dry cleaning, photo processing, postal services and ATMs

Want to know more?

Title: The Hay report: compensation and benefit strategies for 2000 and beyond.

Availability: contact Susan Hale, report co-ordinator in Massachusetts, USA, tel: (001) 781 239 1111.

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