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With business performance looking better in 2014 than previous years, and with headcount growth having peaked, many employers now view their key challenges as delivering on their growth strategy and vision.
As employers deal with the tail-end after-effects of the recession, organisational restructure is the biggest challenge with many companies looking to increase remuneration only on a role by role basis, allowing them greater flexibility in a changing landscape.
Meanwhile employee recruitment and retention rates have improved over 2013, with 84% believing employee benefits had a role in this.
There is also increased confidence in meeting the challenges of auto-enrolment, but this may reflect that many employers have now staged and addressed their immediate concerns around compliance rather than that they are delivering effective employee engagement levels.
In pensions, the area of benefits into which employers typically invest most, engagement remains the greatest challenge, suggesting communication is more important than ever. Indeed for many engagement is something they are only just focusing on now they have met the initial regulatory hurdles of staging and transition.
Health and wellbeing remains an area of contradiction, with a continuing lack of transparency around absence trends, coupled with an increase in transparency around health costs. However there are signs of potential savings, for example in life cover where employees believe 2.8 times salary is sufficient, 0.7 times less than HR (3.5 times).
Perhaps the most interesting highlight from this year’s report is the perception-gap between Finance / HR teams’ valuations of their employee benefits investment and employees’ valuation (13.8% / 11.3% versus 6.6% of basic pay). This seems to suggest that better communication and engagement are required for employers to really maximise the value of this key investment.
Employers are starting to recognise this need with evidence of an increase in the use of a specific reward and/or benefits brand for benefits communications (35.6% v 17.0% in 2013). Increased frequency of communications on pensions for example, shows a direct correlation with substantial, continuous investment by employees. However, with only 8% of companies communicating their benefits regularly, there is much scope for improvement.
With only a fifth of companies outsourcing administration to a single provider, the biggest administrative challenge for benefits cited by HR is getting employees to interact with their benefits package. And yet, paradoxically, when asked how much they would be willing to pay for a system that bridges the gap between where they are now and where they would like to be, HR are willing to pay less than Finance Directors.
Could it be that software could hold the key to HR’s administration headaches and Finance’s return on investment? Download the full report.