At a glance
- Employers are failing to address salary expectations and employee benefits
- Disparity between employee benefits on offer and what staff want
- HR urged to align pay and reward policies to address changing workforce needs
Employers are placing too much emphasis on ‘glitzy’ total reward packages and employee benefits instead of addressing salary expectations and career progression opportunities, the Institute for Employment Studies (IES) has found.
The IES research report, 2019: A totally rewarding year? headed up by Duncan Brown, head of HR consultancy at the IES, warned that employee benefits were failing to tackle real workforce needs. The majority of UK employees have experienced pay stagnation since the 2008 great recession along with ‘poor and flatlining’ engagement levels and gender and ethnicity pay gaps.
Employee value proposition
“The investment in the employee’s overall package and company employee value proposition (EVP), is not just salary, it is an investment for the employee,” said Sarah Robson, senior communications consultant at Aon. “The key to a valued employee benefits package is awareness and understanding from employees. In fact, recruitment and retention are two of the biggest issues for companies at the moment, according to the Aon Benefits and Trends Survey 2019. Employers must stand out of the crowd and a good EVP including benefits and rewards is how to do this.”
Speaking exclusively to People Management, Brown said there was often a ‘disparity’ between employee benefits packages and how they were marketed to staff and how meaningful and relevant they actually were to the workforce as a whole.
Instead, employee benefits needed to address the underlining issues of poverty and inequality, Brown advised, and urged employers to look at base pay offer for the lowest paid staff.
He said: “There’s a contrast between what you see in terms of what a lot of employers promote […] and the actual experience of the employees […] If businesses are going to realise the real benefits of a total rewards approach then they need to change tack. Ultimately, base pay is key for most people, so you need to get your policies right on that.”
17-year wage squeeze
According to the TUC, 2025, the year wages are widely expected to return to pre-financial crash levels, will mark a 17-year wage squeeze, the longest period of declining wages in two hundred years. In 2018, real wages were still worth £24 a week less than they were in 2008.
Among the recommendations put forward by the IES research, employers were urged to:
- ‘align’ pay and reward policies with other HR, talent and diversity management practices to tackle workers’ changing needs
- ensure total rewards packages were based on ‘decent base pay levels’
- ensure all employees, especially the lowest paid, had genuine opportunities for career progression
- include mental health and financial wellbeing support packages played a key role in employee benefits.
Robson added: “Companies are widening the view of traditional benefits to encompass wellbeing initiatives. Benefits are now delivering all they can for employees in their working life and preparing them for life after work, too. Financial education, pension understanding and even benefit awareness need to be a key focus for companies. This will ensure that employees know and understand all they have to offer and remain engaged”.
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