The workforce is changing. By 2020, 40% of our colleagues will be millennials (aged 23-38). Already, these people are pushing for change. Not because they’re rule breakers, but because cash is no longer king when it comes to salary. Today, we want more than money in return for our labors.
Another significant change has opened salaries and rewards up to a lot more scrutiny. This is the openness of younger employees when it comes to discussing salaries.
Once a taboo subject, a recent study by our total rewards and compensation platform partner, beqom reveals that 56% of millennials will happily discuss salary with their colleagues. This rises to 61% for those entering the job market. Only one in four Baby Boomers would consider salary as an acceptable topic of conversation.
This openness calls for a change in mindset for employers, and a need for total pay and reward clarity. The worst scenario is that one employee thinks another is earning more than they are when in fact this is not the case. You can read more on this in this recent blog, Why Employers Must Teach Employees about Total Rewards.
This shift from cash to rewards and benefits is a good thing. They present huge (often missed) opportunities for businesses, especially at times when there is no budget available for cash pay reviews.
We recently partnered with Benify, to round out our integrated payroll benefits solutions and services portfolio. This has been an interesting learning experience. There can be the perception that benefits are simply add-ons to a salary package, but the bearing they can have on a business, and its relationships with its workforce is so much greater.
It’s surprising how few businesses still offer no benefits as part of their international payroll processes beyond the basic holiday, paid leave and pensions statutory in their jurisdiction. By looking at the cost versus the performance and loyalty return, this makes no sense.
Companies with online, self-service options, where employees manage their own rewards packages, report more than financial returns.
For your business, employee benefits mean;
For most businesses, the cost of rolling out an integrated flexible HR and payroll benefits scheme is almost immediately negated by the cost savings gained through process standardization, retention and control of costs.
As people reach new stages in their life, so their lifestyle changes. Flexible benefits, therefore, should be set-up to evolve to support the employee through these changes.
For the employer, with minimum effort, the employee is receiving far more than a monitory reward for their work, they are being offered options. People like to feel in control.
Benefits can also be a great stress eliminator. They can make the logistics of life so much easier. For someone in their 20s and 30s, the option to assign less of their benefits allowance to a pension and more to buying days off to cover travel or childcare, for example, is a huge bonus – and one that costs the business very little.
Employees in their 40s are likely to be attracted to generous pension contributions (all tax deductible), while those in their 50s could be looking at extended healthcare options, or again, the opportunity to travel while still in good health and likely on higher salaries.
At the end of last year, I contributed to this blog, HR Tips for Managing Your 4 Generation Workforce, where we touched on the expectations of the workforce when it came to company culture, flexible working, the changing workforce dynamic and performance reviews.
As a result of our partnership with Benify, NGA HR will now provide clients with the option to integrate Benify’s digital employee engagement platform into existing HR and payroll infrastructures and into all digital HR transformation projects.
One of the great advantages of this is single source HR data and so the ability to administer seamless admin checks. For example, most pension and insurance companies issue a single invoice for all employees, but what if someone leaves? How easy is it to notice if the premium of a now ex-employee is still being paid? The processing lag using standard processes can be several months, with several £1,000s in overpaid premiums. And, how easy is it to gather evidence by applying HR analytics?
This simple cost control alone usually justifies the business case for integrating an online benefits platform into your HR and payroll processes. It integrates fully with the employee lifecycle.
The visibility that self-service benefits and rewards bring to the employee / employer relationships cannot be under estimated. Without this visibility;
For a quick example, a £50,000 salary can easily become a £55,000 with the addition of tax free pension contributions.
When matched against the £2,000 pay increase a potential new employer is offering, suddenly, it becomes clear to the employee the value of a total pay and rewards package, but you, as the employer, needs to be sure that this is clear!
However, it’s not enough to just offer flexible benefits. As an employer, you must regularly ‘remind’ your employees of the value of their total reward. It is all too easy for an employee to lose sight of this.
Total reward, and the equally challenging ‘compensation gap’, are outlined in this recent blog, Why Employers Must Teach Employees about Total Rewards, but the long and short of it is; No business can achieve its full potential if its employees think competitor employers are offering better salary packages.
This is the downside of flexible benefits. A study by our benefits partner, Benify and YouGov, discovered that 8 out of 10 employees think they receive a third less in total reward from their employer than they actually do.
What this means is that when it comes to comparing salaries, many are using just 67% of their actual salary as the comparison figure. This is a major problem for employers and employees.
This lack of visibility is what we call that the “Compensation Gap”. The gap being the difference between what employees perceive as their Total Compensation
Managing the complexities or executive pay is yet another challenge for the rewards teams. These executives are very heavily compensated for the success they generate. There are often tiered rates of reward.
To simplify this process for our clients we recently partnered with beqom. For a business, the platform makes it is easy to understand the performance and retention returns on specific rewards and incentive programs.
For employees, beqom presents the total value of rewards – addressing the compensation gap that sees many employees leaving organizations for perceived higher salaries. It also makes it very easy for employees to see what they need to achieve for financial reward. This can be a huge motivator and drive the efficiency of individuals and business groups.
Our own Global Pay Optimization Survey found that the top five benefits an employee wants are very simple to deliver and low cost to the business;
A survey by Glassdoor, suggests that;
Further research by Arise suggests that 58% of workers would take a pay cut to be able to work from home and 25% would be happy with a lower salary to avoid their commute.
These findings tell us that employees rate benefits and perks highly when making job decisions and determining which companies to work for – and to stay working for. It makes sense, therefore, that all employers rank benefits and rewards high on their HR agendas. The true value of benefits and rewards needs to be sold to the business and to the workforce.