Employee Benefits Research 2007: responsibility & communication

Not too long ago dedicated compensation and benefits roles were few and far between. However, the area has developed into something of an HR specialism in recent years. Our research bears this out with 25% of employers saying that compensation and benefits or reward directors and managers have primary responsibility for benefits decisions, with a similar proportion (28%) stating these roles influence benefits decisions within their organisation. But in most organisations, it is the managing director or chief executive who has the final sign-off on benefits decisions (65%), followed by the HR director (48%). Financial directors also have a benefits decision-making role, but their main input is in influencing decisions. The role with the greatest influence is that of the HR manager (58%), which is far greater than that of their ultimate boss, the managing director. The role of HR officer, or equivalent, also has a sizeable influence (41%) – a factor which should boost morale.

The smaller the organisation, the more likely it is that the managing director, chief executive or equivalent will be a primary decision maker. Three-quarters of privately-owned companies, meanwhile, say this is a key role compared to 55% of publicly-listed companies, and 47% of public sector employers.

The HR director’s power base lies in organisations with more than 500 staff where the role is given more responsibility for making benefits decisions. This is also the case in public sector organisations and publicly-quoted companies, where around 60% of employers say the HR director has primary responsibility for benefits decisions, compared with only 39% in privately-owned firms. It is no surprise that the benefits decision-making capacity of senior compensation and benefits roles is greatest in those organisations with more than 5,000 staff and publicly-quoted firms.

No matter who is responsible for making decisions around benefits, the biggest issue influencing benefits strategies is the need to improve the perceived value of the benefits package: a goal which goes hand in hand with the task of communicating it (see page 11). Communicating benefits does not have to cost a lot of money, it simply requires some imagination to decide what messages need to be conveyed and how. The most popular method of communicating perks is at induction meetings for new joiners (83%).

The communication process needs to be ongoing and should not just be focused on what is on offer but should also explain how much the benefits are worth. Perhaps the best way of conveying these messages is through total reward statements which not only state what the recipient receives, but also what they could be entitled to after a defined period of service or if they were to opt into the pension or share schemes. These statements have become more widespread, with 28% of employers currently using them, compared to 19% in 2004. Their use is greatest among publicly-quoted companies (43%) while the public sector (14%) deploys them least. The greater availability of technology has also led to a rise in the use of the internet and intranet, and benefits modellers, although interestingly the use of emails has declined, perhaps due to a belief that staff are already suffering from email overload.

The most complex benefit to communicate to staff is arguably the pension. Here again, there is a reliance on induction meetings with staff as well as leaflets and brochures – three-quarters of employers say they use these methods. The internet and presentations are also popular. How much an employer communicates their pension schemes depends, of course, on what they want to achieve. Those that take a responsible line and want to drive take up may want to use annual meetings to promote the pension, or if they want to encourage staff to take on responsibility for their future retirement they can offer pensions modellers or review meetings.

Only 29% of employers measure whether their communication methods are effective. The most popular method among this group is the use of staff surveys, closely followed by an analysis of take-up rates for perks. Other methods include the monitoring of internet/intranet hit rates and the number of calls to helplines.

Types of roles with primary responsibility for benefits decisions, and which influence benefits decisions

Decision maker Influencer
Managing director/chief executive or equivalent 65% 28%
HR director 48% 30%
Board of trustees or equivalent 30% 26%
Financial director 28% 48%
Compensation and benefits/reward director/manager 25% 28%
HR manager 11% 58%
Company secretary 8% 19%
Pensions manager 6% 30%
Compensation and benefits/reward officer or equivalent 5% 35%
HR officer or equivalent 3% 41%
Financial manager 2% 27%
Other 6% 8%
Sample: all respondents

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