Rating the benefits system
The benefits element in the remuneration packages on offer to retail professionals has taken on ever greater significance as economic uncertainty has led to a collective tightening of the purse strings. But which benefits are most important, how important are they and are they being delivered in the right way? Calum MacLeod looks at the results of another major survey by The Appointment.
More years ago than seems possible now, I was working in the labour office of an international port. It was the purpose of that office to allocate the dock's various crane drivers, tug (container truck) drivers and riggers into teams to service the enormous container ships that loaded and unloaded 24 hours a day, every day.
As part of this process it was also up to the labour office to ensure that each worker got a fair allocation of shifts - once over a given level of core hours worked they were then eligible for overtime. We were also the ones the dockers came to with any queries about their pay and shifts they had worked. As you might imagine, this was on occasion quite a high tension environment. The guy I worked for at the time was to labour relations what the Ku Klux Klan is to race relations. He was rude, easy riled and prone to confrontation [to be fair to him, he was great to me and would have been eaten alive had he taken the softly, softly approach with the dockers].
But even this monster stuck to one credo unshakeably: never, ever, mess with a person's take home. Mess with a person's sense of a fair day's pay for a fair day's work at your peril. Allocate any element of a remuneration package in a way that does not stand up as completely equitable and you risk creating a massively demotivated workforce.
Even the most dedicated employee works for the salary and benefits they receive rather than for the love of the business - hopefully no shocks there. In these days of economic uncertainty, with the gap between the retail haves and have nots growing all the time, it is simply not practical for organisations to use salary hikes as a means to recruit and retain the most talented professionals. As a result the benefits packages allocated by employers are taking on more and more significance in this fierce battle for talent. And that's why we wanted to gauge just how well retail's employers are managing to deliver benefits that meet the expectations of their staff, which benefits were most important to retail professionals and whether the allocation was deemed to be fair.
Well, the response to our survey was somewhat mixed, with both good news and bad for those HR professionals tasked with allocating appropriate benefits. What also became clear from the hundreds of responses that came back from retail professionals was that trying to get the benefits right is a pretty tricky problem. Quite simply, everyone has different priorities.
First, let's have some good news. When we asked just how well our respondents felt their employers understood their priorities when it came to benefits, 56.5% stated 'Quite Well' or better. That's pretty impressive given the vast number and diversity of people employed in our sector (somewhere between one in nine and in every ten people who work in this country are employed in retail / hospitality). OK, so only 3.5% said their benefits priorities were understood very well but employers are not clairvoyant and nor can they always give employees the benefits they most want - sometimes it's just not practical financially or operationally speaking.
Slightly more worrying for retailers is the fact that only a third of respondents felt that their benefit package was appropriate to their job role. Almost 60% of people gave a flat out 'No' to this question; that's an awful lot of people who feel they are not getting their due rewards for the job they do. To a certain extent this must be tempered by the reality that very few people are completely satisfied with their lot, almost everybody wants more - until reaching the ranks of the uber-wealthy we are largely an acquisitive bunch. Nevertheless, an individual who believes they aren't getting what they deserve is more likely to be unsettled and more easily tempted away to another job.
With this thought still rolling around our minds, we move on to perhaps the most damning finding of the survey. 58.7% of retail professionals polled did not believe that the manner in which their employer allocated benefits was fair. This is really dangerous territory for companies, as Peter Burgess, managing director of Retail Human Resources explains: "The most important thing about motivational benefits is that they are seen to be fair. Benefits, however generous, if not delivered fairly and transparently will often cause more demotivation than motivation." Think about it - if you feel cheated out of something your reaction will always be incredibly negative. Massive levels of resentment can be generated if employees believe that remuneration of any kind is allocated on a subjective basis, if there isn't a clear, fair and unequivocal system. Such a belief leaves the door open to accusations of bias and favouritism - again, not workplace factors conducive to the successful retention of motivated workers.
So, 60% of respondents did not feel their benefits were commensurate with their role and 60% believed that their employer did not allocate benefits fairly. Ouch.
On the face of it this is a pretty serious problem between employer and employee...and a potentially damaging one at that. But it's important to distinguish perception and reality here. It's inaccurate to say that the survey's findings indicate that 60% of retailers are allocating their benefits unfairly and at an inappropriate level. That's not what is being measured. Instead, what The Appointment's study revealed was employees' personal perceptions of their benefits packages. This is still vitally important - these perceptions are, after all, what will shape a person's commitment to an employer. However, if one allows for the fact that it's relatively unlikely (hopefully) that these incredibly sophisticated businesses have got it quite so disastrously wrong in all cases, the survey's real call to action lies elsewhere: communication.
On the evidence of this survey, retailers need to spend more time ensuring their employees are better informed about the benefits they receive, particularly when it comes to how they are allocated. This is vital. The sense that benefits aren't being distributed fairly simply cannot be left to fester. As has been observed many times of many things, it is not enough to be fair - a system has to be seen to be fair. The question of whether benefits are commensurate with a given role, well that's more difficult in a way. There is no magic wand to be waved and employers can't always give their employees the benefits they'd like. But even having the conversation, acknowledging the discontent would undoubtedly be beneficial. Ultimately, if an employee understands the what and why of their benefits package and still isn't happy, then it is down to them to find an employer offering a package that more closely meets their needs. But it seems crazy to alienate otherwise content, productive employees simply because of a failure to communicate properly.
So what are the priorities of retail professionals when it comes to benefits? Well, as it turns out, that's quite a difficult question to answer. We asked our respondents to rank in order a range of 13 different benefits, with 1 being the most important and 13 being the least. The results that came back were both very clear and quite opaque. Table 4 above illustrates the number one ranked benefits across all candidates. What is immediately obvious is that by far and away the most important benefit was the provision of a bonus. This shouldn't really come as any great surprise, money talks....well you know the rest of that one. Bonuses received over three times (45.8%) as many votes as the number one benefit compared with its nearest rival. With over two thirds of respondents receiving a bonus as part of their package, it's clear that employers are aware of its importance to their employees.
Of course this doesn't allow us to measure the generosity of the bonus allocated and/or the motivational benefit of increasing the bonus level. It would seem reasonable to suppose, however, that organisations looking to make jobs seem more attractive would do well to increase the bonus element in a remuneration package. And indeed many companies have already done just that, with performance related bonuses becoming an ever more common benefit on offer.
The two high scorers after bonuses are Holiday Allowance at 13.7% and Pensions at 13.4% respectively. Not to get too paternalistic about this but it is quite encouraging to see pensions ranking so high, with retail professionals clearly taking their long-term financial future very seriously. Beyond these two elements, the top ranked benefit becomes a close run thing, with each element receiving at least a small fraction of the vote.
Analysis of what benefit was deemed most important overall does not, however, give a full comparative measure of importance. If, for example, 95% of candidates had determined that holiday allowance was the second most important benefit, this would arguably make it more important even than bonuses and yet would not show up in the data. They didn't of course but hopefully you will take the point.
As we've said, candidates were asked to give each benefit a ranking from one to 13 - one being the most important and 13 the least. If a candidate ranked a benefit the third most important, that benefit was allocated a rating of 3, if it was tenth most important it would have a rating of 10 and so on. The scores illustrated in the table represent average rating for each benefit. Thus benefits with the lowest average rating were the most important to respondents.
As you might expect, bonuses once again ranked as the most important with an overall rating of just 3.11. However, in contrast with the analysis of number one ranked benefits, holiday allowances (with a rating of 6.27) ranked only fifth most important overall, behind pensions (4.70), health insurance (6.09) and staff discounts (6.14). Beyond the top two rated options, the ratings for each benefit are relatively close (with the exception of gym membership possibly) - rather illustrating the difficulty of the task facing professionals in charge of developing remuneration packages. Interestingly enough there was almost no difference in the responses when broken down into retail operations and head office functions. Hospitality candidates were the most emphatic about the importance of their bonus, giving it a rating of just 1.88 - in other words, almost everyone voted this as their most important benefit. And of course there were fluctuations according to the age and seniority of candidates: to area managers, for example, a car or car allowance was understandably high in the pecking order, with staff discounts much less so. This stands in contrast to respondents at sales assistant level, whose responses reflected almost exactly the opposite.
It's just impossible to please all of the people all of the time. If one were to draw a conclusion from this data it might be that while the top two preferences are clear, it remains vitally important that individual companies stay in touch with the needs and desires of their workforce. Once again, communication is key.
Lastly, let us have a brief glance at just how important benefits are in terms of job selection. Respondents' opinions were pretty split on this issue, with 53.2% stating that the benefits package on offer was either a moderate or strong influence on their decision to take the job. The remaining 46.8% thought it was of little or no influence. So, in essence, the figures suggest that offering a well considered / generous benefits package would have a positive influence on over half of the retail population. Arguably you might also say that failure to offer suitable benefits risks alienating half of the retail population - not the best starting point for a recruiting drive.
While you are still mulling that point over, consider this: according to The Appointment's survey, a great many candidates would consider taking a new job that actually paid less than their current role if the benefits package more closely reflected their needs. A full 63.8% of respondents said they would be quite likely, likely or very likely to do just that. Money, it seems, isn't the only thing that talks after all.
So, let us return to the beginning of this article and that dire warning against messing with an employee's remuneration. The Appointment's survey actually allows us to put a rather more positive spin on it. If the right benefits are chosen, and allocated in a clearly equitable manner companies can go a long way to establishing a motivated workforce while improving their recruitment and retention rates at the same time. Got to be worth doing hasn't it? Of course, it's easier said than done...