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For many businesses, investment into benefits forms a significant part of the value offered to employees, whether it is appreciated or not. ER360 research shows that, on average, Finance Directors believe that the benefits package they offer is worth 13.8% of basic pay, while HR estimate it at 11.5%. Take a typical company, investing 12% of basic pay: This investment into a benefits scheme that provides access to various forms of support, from retirement services such as pension and financial education to health and wellbeing benefits, represents a significant portion of the company’s bottom-line expenses. Yet employees do not appreciate the true value of these benefits, estimating their value on average at just 6.6% of basic pay. The resulting 5.4% discrepancy highlights a huge opportunity gap for employers, (the equivalent of between £1,620 and £2,700 per employee), who are carrying this significant cost without generating any return on their investment. No matter the size of your business, in today’s market it is hard to justify such a failure to close the gap between perception and reality, and the implications of this are made even more critical when it impacts on your business’ ability to compete in maintaining and attracting key talent.
Where there is a substantial disconnect between the value of benefits and the perceived value of benefits, it is essentially a communications failure, and the solution is one of value translation. Historically, it has always been the job of HR to translate the value of benefits investment into something meaningful for employees – no mean feat, especially if those benefits are not of immediate significance to the employee. This traditional perspective is still relevant today, and is echoed in our research, where across the market all key stakeholder audiences are in unanimous agreement that responsibility for communicating the internal scheme sits squarely with HR.
ER360 research shows that employees who feel they get the right level of internal communications estimate the value of their package at 1.9% more than those who do not feel they get enough (when estimated as a % of their
total basic pay). For an employee who earns £40,000, getting the level of communication about their benefits right could mean a perceived uplift of £3,240 versus £2,480.
Given that the early signs of wage growth are only just appearing and that growth is reported at a level as low as 1.3%, an additional 2% could mean an opportunity to virtually ‘bump’ up pay by helping employees understand the value of their package more.
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