Attracting and retaining talent is a major challenge for UK employers. The battle to increase productivity while delivering cost-efficiencies is driving change in companies’ employee benefit strategies. Pf provides an overview of employee benefits.

Popular HR wisdom, backed up by respected psychologists and employment commentators, suggests that money is not generally the main motivator for employees. Satisfaction in the workplace depends on much more than our annual salary and, according to American psychologist Abraham Maslow, is only one of many ‘hygiene factors’ that determine whether or not we are happy at work. Maslow’s Theory of Human Motivation included his acclaimed ‘Hierarchy of Needs’, which outlined the most fundamental requirements for human satisfaction. It was written in 1943. Despite vast societal and technological evolution since then, its most salient messages still appear to resonate today.

The concept of benefits beyond salary is cemented into the modern workplace. ‘Employee benefits’, defined by the Chartered Institute of Personnel and Development (CIPD) as “non-cash provisions within the pay and benefits package, although they have a financial value or cost for employers”, have traditionally been regarded as a vital component in staff retention. In many cases they have been considered a moral obligation for employers.

In the 1970s, employers increasingly looked towards developing more generous benefits packages rather than rewarding employees via basic salary. But in recent years, as tax legislation has tightened its grip on non-cash provisions, the attraction of certain benefits over salary has been diluted. In response, employers have begun to adopt a more individualistic approach to how employees are rewarded and transferred more of the risk – and cost – of benefits onto their workers. For example, the days of final salary pension schemes are now all but over and have been replaced by the offer of money purchase plans for employees. At the same time, more employers are moving from fixed benefits to flexible and voluntary arrangements.

There is little doubt that the global economic downturn has had a demonstrable impact on the employment market and, by association, the employee benefits landscape. Across the board, companies are adopting a twin focus in which they are trying to balance a drive for productivity gains against the need to deliver cost-efficiencies. As such, employers need to attract and retain talent but, at the same time, secure the best possible return on investment with their human resource. Sustaining staff motivation and employee engagement during turbulent times is a major challenge for modern businesses. Benefits are, of course, one of the key weapons employers have at their disposal to address employee engagement; but with a widespread determination to control costs, companies are needing to be more creative in how they shape employee benefits packages.

Total rewards
The past year has seen a significant shift in the way companies are designing and presenting benefits packages to employees. According to a survey carried out by the UK magazine Employee Benefits, there is a growing trend towards the use of ‘Total Reward’ strategies among British companies. The poll, conducted in March 2011, showed that 45% of respondents received a benefits package that had been presented to them as a Total Reward scheme – an increase from 29% in 2010. CIPD defines Total Reward as a concept that “encompasses all aspects of work that are valued by employees, including elements such as learning and development and/or attractive working environment, in addition to the wider pay and benefits package.”
Total Reward is considered to be distinct from Strategic Reward, which, according to CIPD, is based on “the design and implementation of long-term reward policies and practices to closely support and advance business or organisational objectives, as well as employee aspirations.” But, says CIPD, strategic and total reward may often work in partnership. “An organisation might adopt a total reward approach encompassing the provision of both cutting edge training programmes together with flexible working options – as well as more traditional aspects of the pay and benefits package, in order to recruit, retain and motivate the high quality staff that are best placed to help it secure its business objectives.”
Changes to benefits packages are being driven by market dynamics in the wider business environment. The Employee Benefits 2011 survey identified the following issues as being instrumental in determining benefits packages last year:

• Improving the perceived value of the benefits package.
• A drive to control costs across the organisation.
• Making benefits expenditure more cost-effective.
• Matching benefits to employee need.
• Ensuring benefits are competitive
• Improving the effectiveness of the benefits package.
• Harmonising benefit terms and conditions across the organisation.
• Drive to reduce costs across the organisation.
• Managing pension costs or deficits.
• Encouraging pension scheme take-up.

These findings illustrate a diversity of considerations for managers responsible for employee benefits, and highlight the tensions between fixed, flexible and voluntary arrangements – as well as the challenges of balancing individual rewards for star performers against the desire for an organisation-wide template.

Feeling the benefit
Traditionally, employee benefits packages generally comprised the usual suspects: pensions, paid holidays and company cars. But today, the benefits market has expanded to include a wide array of arrangements that match the changing needs of modern society. So what kinds of benefits are included in a contemporary Total Rewards plan? The most common benefit is Life Assurance/Death in Service, which seems to be offered to all employees by the vast majority of employers. Alongside this, and perhaps in line with the thinking behind a Total Reward approach, most companies consider training and development to be an employee benefit and, again in the main, provide it to all members of staff. It is arguable whether employees themselves regard this as a significant benefit or simply as a natural and expected aspect of any job of work.

Behind Life Assurance and training and development, the Employee Benefits survey showed that more than two thirds of benefits packages (70%) include counselling/Employee Assistance Programmes (EAPs) – a benefit that appears to reflect modern demands in an era where many individuals are burdened with high levels of debt and stress, as well as being exposed to increasing instances of redundancy. The survey’s authors say that EAPs have now become a mainstay of many employers’ core benefits, having grown in popularity in the past few years. In 2004, only 30% of its survey respondents’ benefits packages included EAPs. Other popular benefits include childcare vouchers, extra holidays for long service and the option of additional voluntary pension contributions.

Outside of the core options, companies offer a wide range of additional benefits to their employees on an all-inclusive or selective basis. Some examples are listed below.

Taxing measures
Some employee benefits attract preferential tax treatment, often in line with government policy to support lifestyle choices – for example, childcare vouchers and cycle-to-work schemes. Alternatively, employees may enter into a salary sacrifice arrangement. Under such agreements, an employee gives up part of his/her gross salary in return for the employer agreeing to provide a benefit. For example, under a pension salary sacrifice arrangement, a member of staff gives up a percentage of their salary while the employer makes an equivalent contribution to the employee’s pension. The employee saves on income tax, while both employer and employee save on National Insurance contributions. However, salary sacrifice agreements may have implications for other provisions such as working tax credits or the national minimum wage. CIPD advises parties considering such arrangements to visit the HM Revenue and Customs website for further information.

Have your say
Has your benefits package changed within the last twelve months? Have you gone from having an enviable rewards scheme to one of the bare minimum after cost cutting measures from your employer? Now in its 11th year, the Pf Company Perception, Motivation and Satisfaction Survey offers those working day-to-day in the medical sales industry the opportunity to vent their frustrations at everything from horrible bosses to a measly bonus package – all behind the shield of anonymity. So, if you’ve had your company car taken away or your pension scheme has been reduced have your say today at www.pharmafield.co.uk/survey. The online survey takes only ten minutes to complete with a donation made to the charity Home from Hospital Care for every completed form.    

During an era of job cuts and widespread pay freezes, employee benefits are an essential way of maintaining motivation and satisfaction. But just how important are these?

After sitting through a palm-sweating, grilling and probing interview from potential bosses, the first question you’re likely to be asked afterwards is not about how well your interrogation went, but what are the perks like?

It’s in our nature to want to know what added extras we’re going to get. We always like to believe we’re getting a good deal, be it at a hotel, whilst out buying a new pair of jeans, or at work.

With job security at an all time low and wage increases way below the rate of inflation, employers are realising the importance of reward packages to keep experienced professionals on board.

For the past four decades, organisations have increasingly looked to improve the benefits packages which they offer to staff. These have become more individualistic recently as organisations aim to increase loyalty via new perks instead of widespread salary increases.

Private medical and accident insurance, season ticket travel passes, death in service payments, flexitime and pensions schemes are all commonplace. But are they enough to stop employees making envious glances at roles in other organisations?

These perks are appreciated if they are ever called upon – and may even be taken for granted in the modern workplace – but when employees are asking for more towards the price of travel or a greater subsidy at the canteen there comes a point when employers start to rein in added benefits.

As companies have started to tighten their belts, company cars have been pulled, pension schemes have stopped and the portion sizes at lunch have been reduced. These added extras may seem to be expendable by employers, but they are valued by the workforce. When these are removed staff take it personally – people like boasting about having the nearest car parking space to the door or how their dog is insured through the firm.

But what can be done about it? Would you really put your job on the line to insist Puddles’ vet’s bill is covered or because you now have to fight for a parking space every morning? How important are perks of the job at a time when people are pleased not to arrive at work on a Monday morning and find their P45?

Have your say on your benefits package in Pf’s annual Company Perception, Motivation and Satisfaction Survey here. The online survey takes only ten minutes to complete with a donation made by HSP – the publisher of Pharmaceutical Field – to the charity Home from Hospital Care for every completed form.

There’s no better feeling than seeing the clock strike five on a Friday afternoon. The weekend brings two whole days where early morning alarm clocks and standing in line at the local Tesco at 1pm to buy a soggy sandwich are a distant memory.

Work-life balance has always been a difficult factor to measure – both for employers and their staff. Sure, companies want to get the most out of their staff – after all, a happy worker is a productive one. But should companies be doing more to give their workforce the Friday feeling throughout the rest of the week?

Recent figures from the Office of National Statistics show that workers in the UK trail only Greeks and Austrians for working the most hours in a week. The average full-time employee now works 42.7 hours. The Danes on the other hand manage to get away with doing only 39.1.

Unsurprisingly, the same report showed those happy Danes had a higher level of productivity per hour compared to the UK. In fact, 11 countries had a higher level of productivity per hour compared to over-worked UK employees. A happy, refreshed worker really is a productive one.

But is work-life balance judged solely on the amount of hours you work a week? Would you be happier with a smaller salary working part-time? I guess the answer in many instances would be no.

In an era when more people are having to take on additional responsibilities and enjoying less time with their families, employers have their own responsibilities to ensure staff can balance work, rest and play.

Flexible working hours – especially for representatives covering large territories – are appreciated, as are other ‘perks’ of the job. These may seen by some bosses as unnecessary and a hindrance, but it’s sometimes the little measures which are appreciated the most by those working at ground level.

In last year’s Pf Survey, respondents voted work-life balance as the fourth most important motivating factor. But, at the same time, it was also one of the least satisfying aspects of their job. Clearly, more still needs to be done to address the issue of balancing time spent at work and away from it.

Are you happy with your work-life balance? Does your company do enough to ensure you get chance to enjoy free time away from the office? Have your say today in the Pf Company Perception, Motivation and Satisfaction Survey here.

Eli Lilly is again celebrating after being selected as one of the “100 Best Companies” for mothers by a US magazine.

Working Mother selected Lilly for the 17^th consecutive year for the benefits it offers employees, including on-site child care, adoption assistance and development programmes.

Lilly says it has an “extensive record” of creating an environment that “empowers employees” to balance personal and work life responsibilities.

Now in its 26^th year, the initiative selects the US’ top companies which provide family-friendly benefits.

Benefit-related programmes at Lilly also include an on-site summer camp, back-up care, support groups, on-site conveniences, health services and nursing mother stations.

Carol Evans, President of Working Mother Media, says the flexibility companies now offer to women “enhance loyalty and dedication among their employees with children”.

Abbott, AstraZeneca, Boehringer Ingleheim, Bristol Myers Squibb, Merck and Pfizer were also included within the top 100 companies selected.

Attracting and retaining talent is a major challenge for UK employers. The battle to increase productivity while delivering cost-efficiencies is driving change in companies’ employee benefit strategies. MB provides an overview of employee benefits.

Popular HR wisdom, backed up by respected psychologists and employment commentators, suggests that money is not generally the main motivator for employees. Satisfaction in the workplace depends on much more than our annual salary and, according to American psychologist Abraham Maslow, is only one of many ‘hygiene factors’ that determine whether or not we are happy at work. Maslow’s Theory of Human Motivation included his acclaimed ‘Hierarchy of Needs’, which outlined the most fundamental requirements for human satisfaction. It was written in 1943. Despite vast societal and technological evolution since then, its most salient messages still appear to resonate today.

The concept of benefits beyond salary is cemented into the modern workplace. ‘Employee benefits’, defined by the Chartered Institute of Personnel and Development (CIPD) as “non-cash provisions within the pay and benefits package, although they have a financial value or cost for employers”, have traditionally been regarded as a vital component in staff retention. In many cases they have been considered a moral obligation for employers.

In the 1970s, employers increasingly looked towards developing more generous benefits packages rather than rewarding employees via basic salary. But in recent years, as tax legislation has tightened its grip on non-cash provisions, the attraction of certain benefits over salary has been diluted. In response, employers have begun to adopt a more individualistic approach to how employees are rewarded and transferred more of the risk – and cost – of benefits onto their workers. For example, the days of Final Salary pension schemes are now all but over and have been replaced by the offer of money purchase plans for employees. At the same time, more employers are moving from fixed benefits to flexible and voluntary arrangements.

There is little doubt that the global economic downturn has had a demonstrable impact on the employment market and, by association, the employee benefits landscape. Across the board, companies are adopting a twin focus in which they are trying to balance a drive for productivity gains against the need to deliver cost-efficiencies. As such, employers need to attract and retain talent but, at the same time, secure the best possible return on investment with their human resource. Sustaining staff motivation and employee engagement during turbulent times is a major challenge for modern businesses. Benefits are, of course, one of the key weapons employers have at their disposal to address employee engagement; but with a widespread determination to control costs, companies are needing to be more creative in how they shape employee benefits packages.

Total rewards

The past year has seen a significant shift in the way companies are designing and presenting benefits packages to employees. According to a survey carried out by the UK magazine Employee Benefits, there is a growing trend towards the use of ‘Total Reward’ strategies among British companies. The poll, conducted in March 2011, showed that 45% of respondents received a benefits package that had been presented to them as a Total Reward scheme – an increase from 29% in 2010. CIPD defines Total Reward as a concept that “encompasses all aspects of work that are valued by employees, including elements such as learning and development and/or attractive working environment, in addition to the wider pay and benefits package.”

Total Reward is considered to be distinct from Strategic Reward, which, according to CIPD, is based on “the design and implementation of long-term reward policies and practices to closely support and advance business or organisational objectives, as well as employee aspirations.” But, says CIPD, strategic and total reward may often work in partnership. “An organisation might adopt a total reward approach encompassing the provision of both cutting edge training programmes together with flexible working options – as well as more traditional aspects of the pay and benefits package, in order to recruit, retain and motivate the high quality staff that are best placed to help it secure its business objectives.”

Changes to benefits packages are being driven by market dynamics in the wider business environment. The Employee Benefits 2011 survey identified the following issues as being instrumental in determining benefits packages this year:

• Improving the perceived value of the benefits package.

• A drive to control costs across the organisation.

• Making benefits expenditure more cost-effective.

• Matching benefits to employee need.

• Ensuring benefits are competitive.

• Improving the effectiveness of the benefits package.

• Harmonising benefit terms and conditions across the organisation.

• Drive to reduce costs across the organisation.

• Managing pension costs or deficits.

• Encouraging pension scheme take-up.

These findings illustrate a diversity of considerations for managers responsible for employee benefits, and highlight the tensions between fixed, flexible and voluntary arrangements – as well as the challenges of balancing individual rewards for star performers against the desire for an organisation-wide template.

Feeling the benefit

Traditionally, employee benefits packages generally comprised the usual suspects: pensions, paid holidays and company cars. But today, the benefits market has expanded to include a wide array of arrangements that match the changing needs of modern society. So what kinds of benefits are included in a contemporary Total Rewards plan? The most common benefit is Life Assurance/Death in Service, which seems to be offered to all employees by the vast majority of employers. Alongside this, and perhaps in line with the thinking behind a Total Reward approach, most companies consider training and development to be an employee benefit and, again in the main, provide it to all members of staff. It is arguable whether employees themselves regard this as a significant benefit or simply as a natural and expected aspect of any job of work.

Behind Life Assurance and training and development, the Employee Benefits survey showed that more than two thirds of benefits packages (70%) include counselling/Employee Assistance Programmes (EAPs) – a benefit that appears to reflect modern demands in an era where many individuals are burdened with high levels of debt and stress, as well as being exposed to increasing instances of redundancy. The survey’s authors say that EAPs have now become a mainstay of many employers’ core benefits, having grown in popularity in the past few years. In 2004 only 30% of its survey respondents’ benefits packages included EAPs. Other popular benefits include childcare vouchers, extra holidays for long service and the option of additional voluntary pension contributions.

Outside of the core options, companies offer a wide range of additional benefits to their employees on an all-inclusive or selective basis. Some examples are listed below.

Typical benefits
Income protection
Private medical insurance
Optical care
Health screening
Personal accident insurance
Concierge services
Season ticket travel loan
Bicycle rental/loan
Retail discounts
Car parking
Dental insurance
‘Give as you earn’/payroll giving
Student grants/repayments
Professional body subscriptions
Lunch vouchers/subsidised staff canteen
Gym membership
Pet insurance

Taxing measures

Some employee benefits attract preferential tax treatment, often in line with government policy to support lifestyle choices – for example, childcare vouchers and cycle-to-work schemes. Alternatively, employees may enter into a salary sacrifice arrangement. Under such agreements, an employee gives up part of his/her gross salary in return for the employer agreeing to provide a benefit. For example, under a pension salary sacrifice arrangement, a member of staff gives up a percentage of their salary while the employer makes an equivalent contribution to the employee’s pension. The employee saves on income tax, while both employer and employee save on National Insurance contributions. However, salary sacrifice agreements may have implications for other provisions such as working tax credits or the national minimum wage. CIPD advises parties considering such arrangements to visit the HM Revenue and Customs website for further information.

Next month, MB looks at incentives and motivation. For further information on employee benefits, go to www.cipd.co.uk. To download a copy of The Benefits Research 2011, visit www.employeebenefits.co.uk.