The latest annual Reward Management Survey from the CIPD suggests that employers' reward spend is not fully understood or appreciated by staff due to a lack of education and communication. The survey notes that more than one-third of companies plan to increase their spend on employee benefits this year, but Charles Cotton, rewards adviser at the CIPD, says that "if employees don't understand or value what they are getting, these employers are not likely to reap the competitive advantage they are seeking".
It found that just 17.8% of employers use total reward statements and only one in five offer financial education to help employees understand the value of their reward package.
The survey also hints at the pressure organisations' reward budgets are currently under:
- More than one-third of companies plan to increase their spend on employee benefits this year, and for more than half of these this is due to increases in benefits costs.
- Over the past year pay review outcomes have been driven by ability to pay, inflation and market rates.
- A large proportion of respondent organisations are aiming to pay at or above the median market rate in order to attract, retain and engage employees.
- There has been a slight increase in the use of more flexible performance-related bonuses against a slight decline in performance-related pay rises.
- Around half the organisations surveyed will need to make changes to their pension arrangements as a result of auto-enrolment.
The CIPD research complements the recent XpertHR article on communicating benefits [£], which noted that "when employees have a good understanding of what their organisation is offering them, this can make a real difference to their engagement and commitment levels."
There is definitely a consensus that in a time of restrained reward budgets, the first way to get the most out of your reward spend is to ensure employees know the value of what they are getting.
The CIPD's report is based on a survey of 455 organisations. The full report can be found on their website.