The workforce is changing. It is said that in 2020, 50% of our colleagues would be millennials (aged 23-38). This cohort are pushing for change. Not because they’re rule breakers, but because cash is no longer king when it comes to salary. Today, we want more than money in return for our labors.
Another significant change has opened salaries and rewards up to a lot more scrutiny. This is the openness of younger employees when it comes to discussing salaries.
Once a taboo subject, a recent study by total rewards and compensation platform provider, beqom reveals that 56% of millennials will happily discuss salary with their colleagues. This rises to 61% for those entering the job market. Only one in four Baby Boomers would consider salary as an acceptable topic of conversation.
This openness calls for a change in mindset for employers, and a need for total pay and reward clarity. The worst scenario is that one employee thinks another is earning more than they are when in fact this is not the case.
Benefits can help retention
This shift from cash to rewards and benefits presents huge (often missed) opportunities for businesses, especially when there is little or no budget available for cash pay reviews.
There can be the perception that benefits are simply add-ons to a salary package, but the bearing they can have on a business, and its relationships with its workforce is so much greater.
Think beyond the basics
It’s surprising how few businesses still offer no or very few benefits as part of their international payroll processes beyond the basic holiday, paid leave and statutory pension contributions.
Life changes and so should benefits
As people reach new stages in their life, so their lifestyle changes. Flexible benefits, therefore, should be able to evolve and support employees through these changes.
From the employer’s point of view, the employee is seen to receive far more than simply a monetary reward for their work. They have options. People like to feel in control.
Flexibility is a huge employee retention tool
Benefits can also be a great stress eliminator. They can make the logistics of life so much easier. For someone in their 20s and 30s, the option to assign less of their benefits allowance to a pension and more to buying days off to cover travel or childcare, for example, is a huge bonus – and one that costs the business very little.
Employees in their 40s are likely to be attracted to generous retirement contributions, while those in their 50s could be looking at extended healthcare options, or again, the opportunity to travel while still in good health and likely on higher salaries.
Employees want more!
The visibility that self-service benefits and rewards bring to the employee / employer relationships cannot be under-estimated. Without this visibility;
- Employers can undervalue the time and lifestyle options that benefits offer an employee above straight money
- Employees can be naive to the actual monetary value benefits add to a salary
Mind the compensation gap
However, it’s not enough to just offer flexible benefits. As an employer, you should regularly ‘remind’ your employees of the value of their total reward. It is all too easy for an employee to lose sight of this.
A study by, Benify and YouGov, discovered that 8 out of 10 employees think they receive a third less in total reward from their employer than they actually do.
What this means is that when it comes to comparing salaries, many are using just 67% of their actual salary as the comparison figure. This is a major problem for employers and employees.
This lack of visibility is what we call that the “Compensation Gap.” The gap being the difference between what employees perceive as their Total Compensation and ….?
What we now know
These findings tell us that employees rate benefits and perks highly when making job decisions and determining which companies to work for – and to stay working for.
It makes sense, therefore, that all employers rank benefits and rewards high on their HR agendas. The true value of benefits and rewards needs to be sold to the business and to the workforce.