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Employers plan to increase the level of employee benefits they offer

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Over the next 12 months a growing number of companies plan to review the employee benefits they offer staff, with the majority intending to increase the level of benefits they provide.

According to Kingston Smith W1's latest Employee Benefits Survey, 98% of employers surveyed offer benefits to employees over and above basic salary and holiday entitlement compared with 90% in 2009.

Overall, respondents agreed or strongly agreed that having a varied employee benefits package was valuable in terms of helping to recruit, retain and motivate employees. However, a large proportion of employers recognise that most of their employees remain salary-dependent.

When it comes to the most popular benefits, holiday entitlement (79%), bonuses (74%) and flexible working (46%) are cited as the top three. But to what extent is this driven by the methods of communication used when promoting benefits to staff? Just under a third of employers said they do not obtain any feedback from staff on their benefits offering. Instead, many respondents collect this information as part of their annual review, when salary and bonus are likely to be at the forefront of the employee's mind. The sector also uses traditional methods of communicating the benefits on offer. Over three-quarters of respondents use their employee handbook, a separate benefits handbook or employment offer letter to communicate benefits; more sophisticated techniques using an intranet or internet-based benefits accounts do not yet appear to be common.

Focusing on the non-insured elements of the benefits package offered, with holiday entitlement (76%), performance-related bonuses (74%) and the cycle-to-work scheme (69%) coming out on top, there is little change to the most popular benefits offered by organisations of all sizes when compared with the 2009 results. In terms of the insured elements, stakeholder pension arrangements (69%), private medical insurance (69%) and life cover (69%) continue to feature strongly, as does the provision of healthcare benefits (67%).

The survey results show that career progression (67%) is likely to be the single biggest reason for staff to leave over the coming year. But enjoying the work (95%), recognition of a job well done (90%), and rewards and bonuses (88%) are the top three factors likely to help agencies retain staff. The benefits package remains a key component with a middle ranking (46%), while equity in the business scored lower (44%).

Mandy Merron, a partner at Kingston Smith W1, said: "The economic downturn meant that pay freezes and, in some cases, pay cuts were the norm in 2009. So some employers may have already broadened their employee benefits offering to help boost staff morale, while others may look to do so over the coming year as they endeavour to hold onto their brightest and best."

She added: "The risk is that by taking our eyes of the factors in our working environment and culture that make people feel valued, as soon as the economy turns and new vacancies appear, disgruntled staff are likely to leave. Before you know it the expense of high turnover is back. It is therefore unlikely that a great benefits package will help to retain staff in a working environment that is not highly valued.

"The challenge is to balance steps to improve the working environment, with offering a competitive salary and a more varied and flexible set of benefits. Agencies that achieve this balance are likely to be able to attract and retain talented individuals who can contribute to the company's success. The results also confirm our view that equity is a benefit that should be offered only to those few key individuals who will be truly motivated by it."