We live in a world characterised by volatility, uncertainty, complexity and ambiguity and, as the war for talent rages on, there is an ever-growing pressure on HR directors to put in place engagement strategies, talent pipelines and succession plans to bring in the brightest and the best new recruits and secure the long-term sustainability of their businesses.
But in an economic landscape where reports in the press regularly tell us that engagement is king – and this is driven by culture, values and a democratisation of the workforce; is there a place for paternalistic employee benefit plans in the modern workplace?
Businesses are struggling to make sense of where their benefits and pensions fit into the wider picture of recruiting and retaining the right calibre of staff that will lead companies to a productive, profitable future.
Why offer employee benefits?
Employers provide benefits to staff for a variety of reasons. Some do it because they have concerns about attracting or retaining the best staff; some are driven by the needs of their industry or location; and many just hope to cover off their legislative requirements within the timescales set by government.
Nonetheless, whether employers are drawn or compelled to provide benefits for staff, they should always seek to gain the maximum value out of their investment and how it impacts employee engagement and indeed how it can connect to business productivity.
It makes sense to check which perks people see the most value in and that’s the reason why Davidson Asset Management (DAM) set out to find out the benefits employees really need and want… and those they don’t.
After all, if employers are aiming to attract the best talent to their business in an ever competitive marketplace, their perks could a useful weapon in the armoury.
Employees value benefits
Our study of more 439 employees found that 71% value benefits highly when choosing where to work and the majority of UK employees believe benefits packages should change as their personal priorities do (82%). But just under three quarters of UK employees would prefer to be given a pot of money each year to purchase their own benefits from providers they know and trust. When asked to design their own employee benefits package for 2015, pensions was placed first by an overwhelming majority (86%).
In saying that, more than two fifths (41%) of UK employees are more concerned with buying a house than saving for the future while just under a quarter (24%) are unsure which is their priority. And, when asked create their dream benefits package for a workplace in 2035 – pensions contributions were rated third by employees, with a baby bonus placing first and retirement planning a close second.
Given the state of the UK housing market and the rising cost of buying a home, it’s hardly surprising that employees are opting for bricks and mortar over saving for their retirement. But this can only be as a result of a lack of understanding about pensions and the wider benefits package, putting increasing pressure on employers to adopt financial education to increase awareness. In fact the study showed the vast majority of employees (87%) believe it is the employer’s responsibility to explain how they can get the most from their employee benefits package.
The leaders of tomorrow
Generation Z will provide an additional obstacle to traverse in the war for talent as these under 20s enter the workforce hoping for a completely different way of working to their baby boomer and generation X colleagues.
Regarding the benefits they most value now younger employees are more likely to want benefits in the form of information, than their older colleagues, with 37% valuing mortgage advice (17% for 30s and over) and 42% valuing financial advice (17% for 30s and over).
University students and aspirational entrepreneurs represent the future of business leadership and by 2035, could be the people making the decisions on corporate benefits, pensions and financial education.
As part of the research, DAM carried out a focus group with undergraduate business students at Hult International Business School. The ten participants in the focus group agreed that when considering saving for retirement, ‘now is always better than in the future’. One said: ‘We need homes and food to eat, that’s why people are worried about buying a home more so than pensions…’
However, the group was in agreement that financial education is one of the most important lessons people can learn – and, for them, a key consideration in deciding where to work. The group expects their future employers to explain the offered benefits to them as part of the interview process.
Students agreed: “The mindset is shifting. Benefits should be considered that will appeal more to [generation z and millennials]… Employers should encourage year-round open feedback from staff. This would allow them to tailor benefits… I don’t think I will focus too much on pensions for years to come as would rather invest in housing and strongly believe that this will generate more security for my future… More discussion around pensions and their alternatives needs to be generated. I believe employees should have as much control as possible over making these important decisions.”
In a business environment where every penny counts to both employer and employee, it would be corporate suicide to axe the employee benefits provision, as the figures show this is a core component of an overall engagement strategy.
Still, with employee benefits representing a significant cost to employers, it’s crucial that businesses listen to staff needs and wants; tailoring their package to suit their workforce. Then they must take the lead in educating their people on the value of their packages; specifically how employees can best use their benefits throughout their entire careers.
Not only will this result in a better return on investment and attract the savvy employees of the future, you also fulfil your duty of care as an employer.
Click here to download the Employee Benefits 2035: a design for the future report.