Looming talent exodus on the horizon as businesses struggle to demonstrate value of their benefits package to retain top talent.
New research finding that UK workers under appreciate their benefits package by the equivalent of a luxury holiday (over £1,400 per employee). For a typical company of 3,000 employees this would equate to £4.24m in undervalued benefits. Staff believe the benefits they receive are worth roughly half the amount their finance and HR departments value them at, due to a lack of financial education and communication from employers. Furthermore, UK workers report a 49 percent satisfaction rate in the packages they receive.
Thomsons’ report surveying over 450 organisations, representing more than 1,200,000 UK workers, found that the majority of HR professionals believe that valued benefits will play a vital role in improving staff retention (84 percent) and engagement (68 percent), as confidence in the economy grows. The report entitled ‘The Role of Benefits in Retaining and Protecting Your Best Talent’ found that business optimism in the UK economy has more than doubled since last year, rising from just 28 percent to 70 percent this year, while over half (52 percent) point to an improved financial performance over last year.
“While it’s encouraging to see rising confidence in the economy, there are worrying indicators of a looming talent exodus for many businesses. With growth prospects improving, many employees now have the desire and confidence to look for new opportunities in the market,” says Matthew Gregson, Consulting Director, Thomsons Online Benefits. “HR departments across the country are rightly recognising the importance of benefits in retaining top talent. However, too few have the technology or communications in place to ensure they’re meeting this objective, leading to a costly liklihood that staff could feel less valued and look elsewhere.”
Compounding the issue is the lack of effective financial education within companies that would better equip workers to appreciate the monetary value of their reward packages. Less than a third (just 29 percent) of employees feel they receive the right level of financial education, and 81 percent of HR professionals agree with them, recognising that too little financial training is provided to staff. There’s also internal confusion over who is responsible for delivering this training – HR professionals believe that intermediaries or employees themselves should be responsible, employees also believe they should be responsible, although financial directors believe this should be left to the financial team.
“It’s not the case that UK businesses are failing to offer comprehensive benefits, instead there’s a lack of internal clarity and finanical understanding amongst employees who are greatly undervaluing their benefits,” continues Gregson. “Forward-thinking HR departments are looking for solutions to this: employees that have sight of Total Reward Statements, for example, estimated the value of their benefits package as 42 percent higher than those who didn’t, while using a single technology platform for benefits delivery was found to save 29 percent of HR’s time, compared to multiple systems. Practical measures like these will help ensure employees’ newly inspired optimism will not result in higher attrition and increased costs, but be channelled into driving business performance and bottom line growth.”
Flat productivity growth leaves employers with little scope to increase wages Commenting on the labour productivity data, Ian Brinkley, chief economist at The Work Foundation, Lancaster University, said: “There is still no sign of the rebound in productivity growth expected in most economic forecasts. With productivity growth flat, there is little scope for many employers to significantly increase wages, and the pressure on living standards, for many in the labour market, will continue. However, it is not all gloom and doom: some sectors such as transport equipment manufacturing, administrative and business support services, and more recently, retailing have shown good recoveries – but these are the exception rather than the rule.
These sector differences also make it difficult for the Low Pay Commission to judge what the next rise in the minimum wage (NMW) should be. The LPC has made clear that faster increases in the NMW will depend on what happens to productivity growth across the low pay industries. Here we have big contrasts – productivity in wholesale and retail has increased by over 6 per cent over the twelve months to 2014Q1, but productivity in accommodation and food services has fallen by three percent.”