· Features

Strategic Benefits: Employers have to keep constant watch to make sure staff are engaged with benefits

Job satisfaction is being sacrificed on the altar of pay and benefits, as the economic downturn forces workers to prioritise financial rewards and perks when deciding to change jobs.

The CIPD's latest quarterly Employee Outlook Survey, published at the end of July, emphasises why employers must not underestimate the importance of benefits, as people's standards of living are hit. It reports 54% of workers want to change jobs to increase their salary and benefits, whereas, last year, 61% cited job satisfaction as most important to them.

Organisations can struggle to plug the gap between what benefits they perceive their staff want and what employees actually value.

Insurer Canada Life's own research earlier this year found almost two-thirds of people now take into account the benefits on offer when considering a new job.

It says the top two benefits offered by employers and those valued by staff are the same: a good pension and more than 28 days' holiday. But while employers put benefits such as free eye tests, death-in-service payouts, shopping discounts, financial bonuses, maternity cover and a subsidised canteen in their top eight, workers would rather have income protection and redundancy benefits, life insurance, critical illness cover, health insurance and extra maternity leave.

Of course, Canada Life sells insurance, but its findings do echo the CIPD's research. Many employers, it seems, are not adjusting their benefits package to reflect workers' lack of confidence in the economy and their employer, or their worries about job security and their health.

Health care cash plan provider Sovereign Health Care says employers should offer 'pre-emptive' perks that benefit them and their workers, such as chiropody appointments for staff who are on their feet a lot and telephone helplines to tackle workplace stress.

Ann Brown, vice president UK HR at business consultancy Capgemini UK, says pensions, holidays and healthcare will always chart well on staff surveys, but it is the feedback on what other benefits staff really value which can be significant.

Capgemini is questioning its workers at the moment and a survey of 1,300 Gen Y employees revealed many people do not regard only being able to make benefits choices once a year very 'flexible' at all. "Companies need a programme of voluntary perks, such as shopping discounts or gym membership, which can be added at any time and run alongside a flexible scheme," says Brown.

Panasonic Europe's head of UK HR Richard Mills saw an urgent need to modernise the company's benefits package when he joined two and a half years ago. In response, a flexible benefits scheme was launched in August 2010, including a group personal pension plan, cycle-to-work scheme and childcare vouchers; all offered via salary sacrifice arrangements. It also introduced a total reward programme. Benefits provider Northgate-Arinso created different online micro websites to explain to staff the real value of the new benefits scheme.

"We held focus groups to discover which benefits from the core programme were the most popular," says Mills. "We had to capture people's interest and the total reward statements now illustrate to them what their benefits package is actually worth, alongside their basic salary."

The second engagement survey since the flex scheme was introduced revealed that, in year one, 48% of staff changed their benefits.

In many sectors, career progression and pay are still the most important consideration for employees, but benefits are still crucial hygiene factors when people are choosing where to work.

Stevan Rolls, head of HR at professional services advisers Deloitte, says talented people want to know if a company offers sabbaticals, carbon-neutral travel and wider perks such as gym membership and subsidised restaurants, as well as traditional key financial and health benefits. One of Deloitte's most recent introductions is identity theft protection.

"We review and remove benefits where take-up is low, because they must help to engage staff and boost morale as well as recruit good people," explains Rolls.

One business watching the benefits debate closely is Hampshire-based solicitors Moore Blatch. It is talking to its 200-plus staff about what a flexible benefits package should look like.

"We already offer core pension, holiday and life assurance and are now discussing our options around flex benefits through our staff forum," says Moore Blatch HR director, Christine Chalk. "I know staff would like to buy more holidays, but as an employer we need to see how that stacks up in terms of the work which still needs to be done to bring in the fees. It is crucial a scheme is managed effectively."

Insurer Aviva's group HR director John Ainley has regular web conversations with staff about benefits and their value. These conversations led to the company launching 'My Aviva extras', offering discounts at more than 3,000 stores. More than 12,000 people have registered to use the scheme and have spent £3.3 million.

These sort of discounts tie in well with the CIPD findings that workers want help as their cost of living rises. Similarly, employee benefits company You at Work has teamed up with collective buying community Incahoot to offer its clients staff discounts on household bills. Companies such as Network Rail and Atos Origin have already signed up. "We launched Incahoot as a consumer site, but realised the employee benefit potential, as staff value any help with life essentials such as food and fuel," says Incahoot's CEO, John Evans.

Case study: Henkel UK

Bob Ferneyhough, HRD at home and beauty care multinational, Henkel UK, says understanding which benefits your workforce value financially is only one part of getting things right.

Henkel owns brands such as Sellotape, Right Guard and Unibond, and Ferneyhough believes any benefit package must also reflect a company's values.

"One of Henkel's company values is 'We build our future on our family business foundation' so as well as good healthcare benefits we send staff birthday cards, wedding vouchers and Easter eggs," he says.

The company, which employs 850 staff in the UK and more than 50,000 globally, has also introduced flexible start and finish times. Staff must be in work between 9.30am and 4.30pm, but they can come in earlier or leave later depending on their personal circumstances.

Henkel introduced a defined contribution pension scheme in 2003 and staff can contribute between 2% and 5% of their salary, which Henkel matches. All staff are automatically enrolled into the scheme and can opt out. About 5% of workers choose not to contribute.

"Saving into a pension is still tax-effective, but there has to be flexibility because graduates have student loans or other staff are saving for a deposit on a house," says Ferneyhough.

Henkel uses staff surveys and feedback from exit interviews to measure how its overall benefits package is perceived.