Seven in ten link reward to business strategy

REWARD MANAGEMENT

Seven in ten link reward to business strategy — but the same weaknesses remain

One of the cardinal rules of reward we are told is that the reward system should be vertically aligned — it is supposed to reinforce an organisation's strategy and core values. So it is reassuring to see that seven in ten organisations polled by Employee Benefits magazine believe that their reward strategy is linked to business strategy — at least to some extent. But what is striking is that a quarter of respondents admit that their benefits are not linked to current or desired culture .

Familiar shortcomings in reward management processes

Much of the Employee Benefits research brings a sobering sense of plus ca change when it comes to the process of reward changes:

• Sadly, fewer than half of the respondents in the 252-company survey measure the effectiveness of the reward package — even to some extent.
• Although for many enlightened organisations it is an article of faith that the involvement of employees in the design of reward systems is a key factor in determining success, less than one in 20 managers (4%) questioned by Employee Benefits said they involved staff to a great extent when designing and modifying their reward practices. In fact, only 22% involve employees at all.

Not always a resounding success

Perhaps these statistics explain why reward packages were not always seen as a resounding success in the context of attracting, retaining and motivating staff:

• 54% of survey respondents have faith in their package’ s ability to retain key staff
• 50% believe it attracts employees
• 30% believe it encourages better performance
• 27% think it improves motivation.

Make-up of benefit packages has barely changed

Conducted every two years, the Employee Benefits survey also offers a fascinating snapshot of the benefits UK employers provide to staff. It also puts into perspective some commonly held assumptions about benefits.

Statistics gathered by the researchers suggest that standard package has changed very little over the last year. The big four benefits — private medical insurance, life assurance, pensions and company car — are still the most commonly offered benefits in Britain, Employee Benefits says.

Benefits most commonly offered by UK organisations

	Per cent of respondents
Pensions	98%
Life assurance	79%
Private medical insurance	75%
Company car	73%
Travel insurance	66%

Source: Strategic reward, part 1 , Employee Benefits, January 2002.

Other key findings

• A number benefits have become much more prevalent since the previous survey in 2000. Travel insurance has seen phenomenal growth , while there was a steady increase in the incidence of personal accident insurance and counselling programmes.
• But some benefits have yet to gain broad appeal. Only 10% of employers use childcare vouchers and 8% have other childcare arrangements. Assistance with childcare facilities is not their only omission. Only 1% of employers offer eldercare vouchers.
• Flexible benefits has not become the panacea for benefits delivery . Less than one in ten of employers (9%) offer it. What’ s more, a fifth of respondents who have considered flex have rejected this approach.
• The trend towards an ever-ageing population and the dramatic increase in the number of employees who have caring responsibilities for elderly people does not appear to be keeping many in the benefits community awake at night — just 21% say it is an issue for them.

Want to know more?

Title: Strategic reward, part 1 , Employee Benefits, January 2002.

Survey sample: The survey was based on information supplied by 252 typical UK organisations in November 2001. Half of the respondents employ fewer than 500 staff, while 21% have more than 3,000 employees.

Business sectors: Organisations from across the UK economy participated in the research, with 17% coming from the manufacturing sector and 12% from finance.

Availability: Contact Employee Benefits subscriptions department in London, tel: 020 7970 4000 or email employee-benefits@centaur.co.uk.

To read the full article online visit the magazine’ s web site at www.employeebenefits.co.uk. Registered users (it's free to register) can click on Archive of articles and then select Research . The online version is entitled "Strategic reward research supplement", and is dated January 2002.

Posted 1 March 2002