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Reward strategies designed to attract the right skills beyond pay looks set to be a focus for employers in 2024. In our autumn 2023 UK Reward Management Survey, employers reported a need to approach reward recognition holistically against restricted HR budgets (with many employers quoting affordability as a key concern).  

Here we outline how your benefits offering can truly deliver value to your employees.

Tailoring support to employees

Our autumn 2023 UK Reward Management Survey revealed that in the preceding six months, 53 per cent of respondent employers experienced difficulties in retaining people and 62 per cent struggled to recruit people. 57 per cent have had to offer new recruits conflicting salaries to those offered to current staff.

When considering how to overcome recruitment and retention challenges, there is a common misconception that generous pay rises automatically equates to a great place to work. However, the greater personalisation and meaningful support employers can offer employees through their other benefits strengthens employee engagement.

The top three benefits offered remain the more traditional ones: pensions, Employee Assistance Programmes, and occupational sick pay. We are increasingly seeing employers tailoring their support, targeting employee lifetime milestones, for example by offering greater compassionate leave to support employees tackling fertility treatment, the menopause or facing miscarriages. Many are prioritising benefits benchmarking in the year ahead to ensure their whole approach to total reward is competitive in the market.

Flexible benefits

Employers are increasingly concerned that the more they offer employees, the more employees expect. To avoid the race to provide more and more choice, empowering employees to select their own benefits gives them greater control to select the benefits that they value the most.

Employers are increasingly acknowledging that they need to refine the benefits on offer just as much as they need to remain competitive on pay. 35 per cent of employers offer a flexible benefits scheme and a further 20 per cent are considering this. Offering flexible benefits enables the individual to tailor their reward package to their own preferences and priorities – ensuring that employees can cherry pick the ones that they value most. Whilst this can drive employee satisfaction from the reward package, it also drives cost savings for employers who can offer a ‘menu’ of options that appeals to different demographics across the workforce.

Total Reward Statements provide an excellent way to communicate the full tangible and intangible benefits that a company offers employees. At a glance, employees can see the investment being made in them, from gym memberships or salary sacrifice schemes, to access to professional development courses.

Performance-led benefits

While bonus levels remain stable, 66 per cent of employers consider the combination of individual, team and company performance when defining their size. This is followed by a less nuanced approach, but one that is more collegiate as it is based purely on company performance for 28 per cent of respondents. Only five per cent base this purely on individual performance.

By making the decision about bonuses more about the wider company performance, many organisations are looking to strengthen their employer brand. This is all of the marketing activity they do both internally and externally to promote themselves as a desirable place to work.

Defining how shared values throughout the business translate into tangible behaviours can enable a high-performance culture, as everyone knows what is expected of them and how they can achieve the wider mission and purpose of the organisation.

These behaviours are something that can be measured and weaved into the performance management framework itself, through score cards and defined metrics, using bonuses to strengthen the company culture and fuel growth.

Values-led benefits

Values are also being used to define the wider benefits on offer. Companies are using their benefits offering to demonstrate their credentials when it comes to their record on Environmental, Social and Governance issues.

81 per cent offer a bike to work scheme and organisations have anecdotally reported that they are moving away from talking about car allowances and schemes, as they are trying to reduce their links to fuel and carbon emissions. Only 17 per cent are offering a fuel allowance, as many consider how they can offer electric vehicles through salary sacrifice schemes. 39 per cent offer the traditional season ticket loans to encourage use of public transport.

In terms of the ‘social’ responsibility of employers, many are examining the impact that they have within the communities in which they operate. 33 per cent have created a dedicated volunteering allowance. 31 per cent also offer the option to ‘give as you earn’. Aligning values and employee buy-in is increasingly considered through sharesave/SAYE, which is a savings-related share scheme that lets employees save towards buying shares in their company.

tow women discussing ideas over tablet

Working from home

Organisations continue to grapple with flexible working as a key benefit. The Financial Conduct Authority won a Tribunal hearing against an employee who had sought to enforce their right to work entirely from home. The flexible working request was denied, even though the manager had been working completely from home since the pandemic. The FCA’s policy to enforce staff working two days a week in the office was upheld by the tribunal.

The case withstood the requirements of the Employment Rights Act 1996 which supports employees’ requests to work flexibly. The act says that employers can refuse applications on the grounds of detrimental impact on work quality or on performance, or both. The new Flexible Working (Amendment) Regulations 2023 will come into force on 6 April 2024, which gives employees the right to request flexible working arrangements from day one of employment (currently you have to be employed for at least 26 weeks to be eligible to make a request).

The FCA had argued that the employee was a senior member of staff and granting the request would affect: onboarding new staff; internal training, supervision and meeting departmental needs; attendance at in-person events and meetings; attending cascade meetings internally to facilitate knowledge sharing, and celebrating individual and team successes. The value of visible presence was emphasised.

Culture built on connection

The case highlights the potential conflicts involved when defining the modern workplace. The CIPD’s head of public policy Ben Willmott commented that finding the right balance can require compromise and give and take. He suggested that consistent policies that ensure people are treated reasonably and fairly help to clarify expectations:

“It is in employers’ interests to, where possible, provide flexible working that meets the needs of individuals and can help attract and retain employees. However, employees also need to understand that any flexibility they benefit from needs to work for the business.”

At the World Economic Forum in Davos, head of L’Oréal Nicholas Hieronimus was unequivocal in his views that remote working means that employees have “absolutely no attachment, passion or creativity. I think it’s vital to be in the office. It’s about serendipity. It’s about meeting people.”

Getting the balance right between connecting employees and empowering them to work where they want to has been an ongoing tightrope walk for companies following covid. A combined hybrid approach agreed within teams, where they come in for two to three days, seems to be the most popular option. This ensures businesses avoid employees becoming isolated and that there are processes to facilitate regular connection and recognition, to foster a strong culture within the workplace.

Trusting employees to balance work-life responsibilities

This does raise the question of whether facilitating greater productivity through collaboration must be done face to face. The counter-argument to office working is the environmental impact of the daily commute, combined with the costs. This highlights how virtual collaboration tools must be seamless to support flexible working arrangements. 50% of respondents to our UK Reward Management Survey reported that they had reduced the days in the office to reduce the commuting cost for employees.

Accessing under-represented talent pools is another key consideration. Flexi-working promotes a greater commitment to diversity and inclusion, as it enables organisations to recruit from a wider demographic, such as care givers and females, who may face more barriers to employment opportunities. Therefore, optimising collaboration through technology and infrastructure within organisations is the key to widening the talent pool and empowering employees to balance their work and home lives post-pandemic.

Since the pandemic, the working week has naturally evolved. From Belgium who has legislated a four-day work week to Pennsylvania in the US, some employers feel it drives greater productivity. A recent pilot programme was so successful that 92 per cent of participants will continue a four-day week. Employers reported a 1.4 per cent revenue increase and staff turnover dropped by 57 per cent over the trial period. Importantly, the trial varied from some taking Fridays off, to staggered models – demonstrating that there is not a one size fits all approach to organisational change.

However, flexible/hybrid working has become a key fixture in many workplaces and one which is highly valued by employees. Incorporating it at some level in your benefits offering will help strengthen the overall reward package offered to employees.

Get in touch

From new and innovative ways to differentiate yourself as an employer in terms of how you empower employees to work flexibly or promote wellbeing, to the more traditional cash-led benefits that are non-negotiables for others, employers are continuously monitoring the range of benefits that offer people the most value. Benefits benchmarking will continue to be a priority for employers throughout 2024.

To support you as you look beyond financial rewards to retain talent, join our webinar on 31 January, which will explore the role of the human touch and key considerations for employers to engage and retain their key talent. On 6 February we will then be joined by benefits specialist Deb Sussex who works with employers to refresh and make sure the range of benefits they offer are fit for purpose. Register and join us to discuss how to overcome current employee benefits challenges and fine tune your benefits offering to drive greater engagement.

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