Ignore benefits and pay at your peril


As some companies report an upturn and others only just start to feel the pain, no organisation should neglect the effect of reward on talent.


Organisations wanting to retain and recruit the best talent in 2011 must adapt their reward and benefits strategy to fit exactly where they are in the economic cycle.

Attendees at a roundtable event, chaired by management institite Roffey Park and sponsored by HR services provider Ceridian, heard that, despite many private sector companies beginning to report improvements in business, many others, including the public sector, were only starting to feel the pain.

"Organisations suffer at different stages of the economic cycle and need to be able to revise their benefit packages to compete," said Ceridian chief people officer, Jeremy Campbell. "They have to keep their employees motivated at a time when those organisations seeing an upturn are suddenly in a position to poach the best people."

Employers in a recessionary market should be looking at non-financial rewards, for example, improving work-life balance, as an option to keep staff engaged if a pay rise is not possible, Campbell added. But he warned: "Once a firm has started to see an upturn, it must then look at different ways to renew the psychological contract it has with its employees – or face losing its talent."

Rewards and benefits are more likely to be linked to performance management in 2011 as employers assess how individuals are adding value to the business and try to develop a more agile workforce, said Angela Baron, engagement and organisation development adviser at the CIPD.

Getting the right mix of benefits will be crucial, she added. "But more effort must be put into this area in a downturn, and employers need to spend additional time communicating effectively with their staff why people are being rewarded in a particular way."

Sue Davies (pictured), head of human resource operations at the charity St Dunstan's, which helps ex-service men and women, said her organisation planned to introduce less expensive rewards, such as hosting themed events for her 350 staff, to make the workplace more enjoyable in 2011.

"This is all part of getting people to work more collaboratively in difficult times, so they share knowledge and so that good people remain with us because they enjoy earning the money they do, even if they will always want to earn more," she said.

Campbell said that organisations that need to retain people with niche skills must also know when they must reward their best talent financially, even if money is tight. The alternative could be the loss of high-performing staff whose decision to leave because they feel undervalued will cause more harm to the organisation in the short term.

Ceridian has enlisted the help of industry experts to draft a whitepaper, published this month, outlining how reward schemes should fit the economic cycle.

See below for the result of HR magazine's first pay survey.


In bad times, a benefits strategy must be seen to be fair, so have a two-way conversation with employees to ensure the package appeals to all

As things improve, set rewards based on people's impact on the organisation

Be creative and consider non-financial incentives if money is tight, perhaps linked to improving your staff's work-life balance

Know when you should reward your best people financially, however tough business is

Ensure the rewards drive future skills and performance so they add value to the organisation as well as to the individual

When trade improves, scale up your benefits to renew the psychological contract you have with your staff

Don't ignore the need for effective workforce planning

Analyse what the recession told you about which benefits your staff really appreciated and which do not need to be reintroduced.

Source: Ceridian whitepaper



54% of employers have instituted a pay freeze in the past 12 months

50% of organisations have no base salary targets

48% of companies determine employee salaries through market forces

36% of employers have no pay strategy in place within their organisation

Source: HR magazine pay survey