Reward management

Nearly all employers are planning to maintain or increase their spending on employee benefits over the next two years, according to the 2018 Reward Management Report from the CIPD.

Some of the main findings from the 15th annual CIPD survey are summarised below.

Benefit provision

  • Professional development benefits (e.g. secondments, mentoring programmes and business apprenticeships) is the area most likely to attract extra money, followed by health and well-being (e.g. EAPs) and financial benefits (e.g. pension schemes or debt advice).
  • The most common benefit is an occupational pension scheme – now almost overwhelmingly based on defined contribution (DC), the exception being among public sector employers, which are more likely to provide a defined benefit (DB) plan.
  • There has been a slight fall in employer and employee pension scheme contributions, consistent with the extension of automatic enrolment in that many new schemes use the minimum contribution rates set by the law, while older schemes contributed more.
  • The two most popular schemes for helping staff boost their DC pension savings are employer contribution matching and salary sacrifice.
  • By contrast, automatic escalation in employer DC contributions, whereby the level of an individual’s pension contribution rises at regular intervals until an agreed level is reached, remains a minority choice, with just over one in ten respondents offering this arrangement.
  • Organisations report a minimal impact caused by April 2018’s increase in employer contribution rates due to auto-enrolment pensions provision, and the most frequent way of accommodating this rise has been through reporting profit reductions.
  • Following pensions in popularity is: paid leave for bereavement and training and career development. A new statutory right to paid bereavement leave and pay will operate from 2020. Given these CIPD findings, it’s questionable (a) how necessary this new right is and (b) what the take up will actually be – although the survey does suggest that the provision of such leave is on a downward trend.
  • Where benefit provision is dependent on grade, seniority, location or job role, the most common benefit is a car allowance, closely followed by a company car.
  • One of the few benefits to show a marked rise in provision, both overall and within sectors, is an EAP.

Policy and practice

  • Communication/accessibility/measuring ROI: HR needs to up its game here as the research reports that around one in six employers still say that their organisation does not communicate information about the benefits it provides, and one in five say that there’s a lack of accessibility. And only a quarter of respondents say they assess the value they get from their expenditure on employee benefits provision.
  • Less than half of organisations offer some degree of choice in benefits. When they offer choice, over two-thirds use an IT system either exclusively or in combination with a non-IT system.
  • Half of organisations say they operate a formal work-life balance policy and almost a fifth plan one in the next year. The more women there are in management, the more likely the organisation is to offer a formal work-life balance policy.
  • Less than one in ten respondents have a formal employee financial well-being policy, although almost one in six plan to introduce one by May 2019.
  • A small majority of organisations anticipate that the ageing population will have an impact on their HR practices over the next five years.

The above is just a snapshot: the full survey provides much valuable benchmarking data and evidence to help employers better manage, evaluate and communicate the benefit of their benefits offering.