Benefits strategy is inextricably linked to recruitment and retention in the minds of most HR experts. When Employee Benefits last conducted research into the strategies of employers (Employee Benefits/JPMorgan INVEST Benefits Research 2007), staff recruitment and retention were considered to be among the main functions of a benefits strategy – 57% of employers viewed benefits as an effective recruitment tool, while 55% said they were an effective retention device.
In this survey, however, when employees (excluding sole traders) were asked to pick three factors that would have an impact on any decision to move jobs or to stay with their current employer, pay came out top in both cases. However, pay plays a significantly stronger role with regard to recruitment. It just shows that money can speak louder than words when trying to convince someone into taking a new job. But it also means that unless a tangible wage increase is in the offing, then employees will be less keen to move jobs. So it makes sense for employers to ensure salary is competitive if staff retention is a key part of their HR agenda.
With regard to recruitment, 74% of employees said pay would be a factor in any decision to move jobs, followed by location (27%), more career development opportunities (25%) and then interesting work (24%). Pay is less of an issue for workers in the charity or voluntary sector.
Pay is also top of the factors influencing staff retention. However, the proportion of employees citing it as an influence on any decision to continue working for their current employer is significantly less at 44%. Pay has less of an impact on workers in the charity and voluntary sectors than in the private or public sectors, who are strongly influenced by the nature of their work.
Location (34%) and interesting work (30%) are also among the top five factors influencing employee retention, along with colleagues (42%) and a good work-life balance (24%). Part-timers are significantly more concerned with work-life balance than those who work full time.
Nevertheless, benefits still have an influence on recruitment and retention. A fifth of employees say benefits would play a role in their decision to move to another employer. When it comes to retention, 10% of employees say benefits would influence their decision to stay put. This is more marked in the public and private sectors than in the charity or voluntary sectors, and among those earning £20,000 or more, or who are employed by organisations with more than 1,000 staff.
With benefits playing a greater role in recruitment than retention, it makes sense for employers to offer a package that is distinctive and attractive. In a tight labour market they should at least consider offering the same as rivals if they are to stand a chance in competing for talent.
Some employers are using a flexible benefits scheme, where employees can pick and choose from a set list of benefits according to their own personal requirements and subject to a set financial limit, to help set them apart from rivals. More than 10% of employees say they receive benefits in this manner. However, the Employee Benefits/JPMorgan INVEST Benefits Research 2007 showed that 19% of employers offer flexible benefits to all staff, and 8% to some staff. The gap could be due to the fact that both employers and staff may describe the manner in which they receive their benefits in different ways. In fact, 8% of respondents do not know the manner in which they receive benefits and 34% claim not to receive benefits as either core, voluntary or flexible.
This latter figure is probably due in part to a lack of understanding about how the benefits package is delivered and what is provided to staff.
Employees will not be able to fully appreciate the value of their benefits package if they do not know what is included or understand how it operates. Communication is key to ensuring that staff understand what is being offered. More than a third (38%) of employees say their employers use paper booklets, 33% say the office intranet is used, 27% email and 21% face-to-face presentations. This last route is the method of communication that is preferred first and foremost by employees, attracting 22% of their vote, followed by a paper booklet (21%), email (18%) and the office intranet (18%).