Rewards revamped as employers struggle to retain staff

Reward strategies are undergoing a radical revamp as employers battle to retain talented workers while cutting costs during the recession.

The annual Reward Management Survey by the Chartered Institute of Personnel and Development (CIPD), out last week, found that four in 10 employers expected to amend existing bonus and incentive schemes this year to seek out better value for money and reduce expenditure.

But employers’ efforts to retain skills are being hampered as a growing number of senior recession-hardened employees on lucrative final salary pensions are contemplating early retirement, rather than waiting out the economic turmoil.

CIPD president Vicky Wright warned organisations had a real balancing act in amending strategies while keeping staff committed to the job.

Many firms have cut back on non-essential benefits, such as car allowance, providing only what employees felt was necessary.

Frances Richardson, head of reward at charity Oxfam, said she was reducing spend on accident and group protection insurance.

“For our sector, everyone understands it’s either jobs or reward,” she told Personnel Today. “We were anticipating a downturn anyway, and we’re in the middle of implementing plans to really slim down [staff] further, particularly in the UK head office operations.” However, she insisted this would not present commitment problems. “The people who work for Oxfam are naturally engaged.”

But Esther O’Halloran, HR director at bakery chain Paul, was concerned some of her staff, a percentage of which were migrant workers, were leaving to seek better pay abroad. The company was ramping up communications to employees about the benefits of staying in the UK.

“We’re relying on benefits such as healthcare and discounted gym membership to keep them here,” she said.

Charles Cotton, reward adviser at the CIPD, warned that HR teams couldn’t afford to rush any policy changes.

“Organisations must ensure they don’t introduce knee-jerk reactions on reward issues when, a year down the line, it could cost them in legal claims or lost savings,” Cotton said.

Legal experts warned that HR directors could open themselves up to a raft of discrimination claims if they failed to comply with collective consultation laws when altering reward strategies.

David Ludlow, employment partner at law firm Barlow Robbins, said: “It’s a risky process, and without proper consultation with employees, employers may significantly increase the number of claims of less favourable treatment, such as sex discrimination.”

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