The cost of some benefits is rising, driven in part by legislative changes. For instance, the minimum employer contribution to a workplace pension increased from 1% to 2% in April 2018, and to 3% a year later. While 3% may not seem much, for some employers, this rise, coupled with other cost increases like the national living wage and the apprenticeship levy, could be significant. In other words: every little hurts.
The Chartered Institute of Personnel and Development’s (CIPD) Reward management report, published in partnership with LCP in November 2018, also found that there have been few changes to the most popular benefits provided by employers over the past few years.
Long-standing, well-loved perks continue to include free tea and coffee, a Christmas party or lunch, and 25 days’ or more paid leave for full-time employees.
Therefore, although nearly all employers surveyed for the report plan to either increase or maintain spend on employee benefits, it is worth noting that not all of this investment should, or will, go towards new initiatives and perks.
In order to meet increased benefit costs, and to raise salaries for new and existing workers, organisations will also be looking at how they can improve productivity to generate better revenue.
Of course, boosting people performance is a lot easier to say than do, hence the growing interest from our members in how to improve the design of their organisations, work and jobs.
One of the CIPD’s most popular resources, for example, has been that which helps people professionals to design and deliver flexible working policies. Flexible working can help to improve productivity by increasing employee motivation; it can also help employers reduce the size of their gender pay gaps, by making it easier to retain working parents and those with caring commitments.
Just as flexible working recognises the importance of work and non-work life, so too does a focus on employee financial wellbeing. While uptake has to date been relatively low, there are signs that more organisations will be aiming to introduce a financial wellbeing strategy in the next couple of years.
Among very large employers, an approach to benefits and reward that takes into account employee financial wellness is fast becoming the norm, rather than the exception. This might include providing financial education, or by promoting benefits that help to spread the value of the employee’s pay packet, such as discounted holidays, insurance and vouchers.
Looking to the future, the CIPD sees no let-up in terms of political and economic uncertainty, and neither will there be a drop in the intensity of technological and social change. If employers want to survive, and indeed thrive, in these uncertain times, then they need to not only review what they do in terms of reward, but also how they do it.
For example, those that do not keep abreast of technological change will not be able to improve the way they manage and communicate pay and benefits. If organisations do not utilise their business and people data, they will not be able to invest their reward spend most effectively.
In addition, those that are not able to create fair rewards will struggle to recruit the talent they desire, while organisations that are unable to create a convincing pay and benefits narrative will likely fail to get the customers and investors they need.
Charles Cotton is senior reward and performance adviser at the Chartered Institute of Personnel and Development (CIPD)