By Chris Hawe
First published: Sunday Business Post (Recruitment Section)
18 May 2008
Reproduced by permission
A new PricewaterhouseCoopers (PwC) report, released last week, has found that benefits alone are not enough to motivate employees who may not be aware of their real value.
The human capital report, Managing People in a Changing World, found that clear and consistent communication was vital to the effective management of employee remuneration.
Siobhan O’Brien, manager, PwC Human Resources Services, said most employees believe that the value of their benefits add up to about 10 per cent of their overall package. The reality, she said, was closer to 25 to 30 per cent of the total package.
“The extent to which tangible rewards motivate employees has always been a debatable point, but such rewards can be very costly to deliver so employers should not be reticent about proclaiming their true value to employees,” she said. O’Brien also pointed to the importance of ‘HR PR’ as a means to sell the value of the employer’s wider offering to staff to staff who might otherwise be tempted to leave for higher base pay elsewhere.
“It is no longer enough for an organisation to offer a competitive total rewards package to employees, HR now has a role to play in selling the total rewards package to generate interest and increase awareness among the employee population,” said O’Brien.
“Employees want their employers to show they care and employers want the same thing in return. When both parties are doing this, the result is well-motivated individuals in high performing teams who develop good customer relationships.” Ellen Roche, director, PwC Human Resource Services, said the link between high levels of employment commitment and bottom line results had resulted in growing interest in engagement metrics.
“They can be used to enhance the image of the organisation as a responsible employer, or improve employee retention where staff turnover is high,” said Roche. “Rapid economic change and uncertainty in many markets makes such measures more relevant than ever.”
Levels of engagement among employees is, Roche said, regarded by many as an important indicator of the financial health and sustainability of a company. The PWC report shows how organisations can plot levels of engagement for an entire workforce by looking at data relating to resignation levels, absence rates, employee attitudes, training hours per full-time employee, performance related pay and incidence of grievance.
“These range from the high levels of engagement that produce positive behaviours such as flexibility and innovation, to the other end of the scale where companies experience resignations, absence, pilfering, theft, oppositional solidarity, even sabotage,” said Roche.
Roche said that ‘engagement’ was important for employers and employees alike.
“Our experience in Ireland shows that both employers and employees want higher levels of engagement, which means applying higher levels of discretionary effort in the workload,” she said.
“This metric is fast becoming one to watch. For example, in an M&A [mergers and acquisitions] context, research indicates that this metric demonstrating employee engagement is one that prospective purchasers watch carefully as an important indicator of the financial health of the organisation and its future viability.”
An engaged employee, Roche said, can be defined by their willingness to go the extra mile for their employer.
“Employees lend their human capital to an organisation, but their actual contribution depends on their motivation and commitment,” she said.
“Although personal drive and values come into play, motivation is mostly influenced by the environment in which people work.
Siobhan O’Brien agreed that communicating the value of pension cover was particularly important, given its relatively high cost.
“A recent PwC Ireland occupational pension scheme survey found that employers need to work harder to communicate the message as this benefit is usually the most expensive one provided by the employers and, at the same time, the least appreciated by employees,” said O’Brien.
“That survey found that, if employees understand the value of their pension arrangements, they are twice as likely to significantly appreciate the company’s contribution.”
Communicating information relating to general reward and other HR issues can take many forms, ranging from employee newsletters to phone or email helplines and video-web presentations, said O’Brien.
“The key to any successful is that it should be designed with the appropriate employee segment in mind,” she said.
“For example, email and intranet communication, which may be appropriate for a financial services back office, may be entirely inappropriate for employees in certain manufacturing environments who might better appreciate home addressed correspondence.”
Companies can also, O’Brien said, use Total Reward Statements – annual summaries for each employee, setting out the value and the breakdown of their total reward package.
“These statements can include a wide variety of items, ranging from the value of the employer pension funding to the value of the provision of educational assistance for the employee,” she said.
The process of communicating the true value of total rewards to employees does not have to significant additional costs, O’Brien said. “Where there is little or no communication, there may ultimately result in significant costs due to lack of employee appreciation and disengagement,” she said.
