EMPLOYEE BENEFITS
Poor communication undermining benefit effectiveness
All too often businesses are squandering about a fifth of their payroll on benefits because employees' appreciation, awareness, and understanding of benefits is so limited, according to a survey by Aon Consulting.
Employers invest huge amounts of money each year in employee benefits: a typical spend on this element of the compensation package accounts for around 30% of salary expenditure. Yet Aon discovered that as many as 78% of employees participating in its research reckon the cost of providing benefits amounts to less than 10% of salary.
Communication is essential
This dismal picture may be partly explained by the fact that employees are not always aware of the benefits they are being offered. There is evidence that poor communications could be one reason why employees do not appreciate their benefits. "Stepping up the benefits communication effort is a relatively inexpensive exercise, especially when compared to the cost of providing the benefits themselves," says Lisa Page, a senior benefits consultant in Aon Consulting. "Communication should engage the employee's full attention, explain facts that apply to the individual and enable then to make effective personal choice. We are seeing a new wave of personalised online and offline communication that does just this."
Key benefits
The survey found that paid holiday entitlement (mentioned by 82% of respondents) and pensions (76%) are viewed by employees as the most important benefits. Just under half of individuals surveyed feel that life assurance and long-term disability are very important or critical.
Choice is key
One of the main themes that shone through as being the most important in this Aon survey was that employees wanted more control over the benefits they receive.
As Lisa Page explains: "Traditional benefits packages are no longer suitable for the entire UK workforce. People want more control and three out of five respondents want more choice over the benefits they receive. A flexible benefits package with built-in choice is a more appropriate way for companies to meet the needs of diverse workforces and will dramatically raise workforce commitment levels.
Employee perception and appreciation of the benefits they receive can be vastly improved by identifying and providing what employees see as the most important aspects of their benefits package. Improved communication and improved flexibility will play an increasingly important role in this process."
A final word
"In many instances employers are providing a wide range of employee benefits but because they fail to communicate the value of benefit packages to their workforce, a large proportion of the costs go unnoticed. The most worrying research finding is that poor communication about benefits directly impacts workforce commitment. We found that almost a third of employees feel that their benefits-related communications do not meet their expectations -- this group are much less committed to their jobs than those who say that communication about benefits meet or exceeds their requirements." -- Lisa Page, senior benefits consultant, Aon Consulting.
Want to know more?
Title: Benefits & Communications @Work, Aon Consulting.
Methodology: Conducted in August 2003, the survey is based on responses received from 1,500 individuals from across the UK. Each respondent is employed in an organisation with 20 or more employees.
Availability: Contact Aon Consulting on tel: 0800 279 5588, or email: enquiries@aonconsulting.co.uk
Aon Consulting focuses on "the delivery of integrated solutions to our clients' HR needs". It specialises in four broad areas: pensions benefits wellbeing attraction and development. Aon Consulting has offices in over 20 locations throughout the UK and is part of Aon Corporation, one of the world's largest providers of insurance and risk management related services. To find out more visit www.aon.co.uk
Posted 5 January 2004