During difficult economic times, staff can feel demotivated, vulnerable and ready to move on. Craig Simpson, head of taxation at Midlands-based RSM Tenon, suggests ways to retain talented staff – by rewarding them appropriately.
Whatever the economic climate, committed employees should still be rewarded. Staff who remain in post after difficult times often feel demotivated. Without careful management, talent can be lost just at the point when the company most needs good people. Taking time to consider and communicate the value employees receive and perceive will enable you to be in great shape for the upturn. If predictions are to be believed, we may have reached the deepest point of recession and are in the process of a steep and escalating climb back to “normality”. During difficult times, companies should recognise employee performance, even if they struggle to reward them.
It’s also important to review business process, HR policies, tax and administration to reveal any untapped efficiencies. Examples could include changes to travel policies and salary sacrifice for pension contributions where savings can come through within a few months of implementation. During the downturn, companies should keep communicating with employees about current HR and reward strategies. Forward thinking companies should make sure employees are engaged and committed to their jobs, despite the tough economic climate. As property activity gathers some momentum, the job market will be revived and employees can be tempted away – so employers need to identify key talent and ensure it is retained and rewarded.
The value – or appreciation – of a rigid remuneration package will depend entirely on the employee’s personal circumstances. For example, what is the benefit of a free parking space for someone who catches the bus to work? Or providing exceptional Death in Service cover for a single person with no dependents? Other examples are offering a staff canteen for someone who is out on the road all day, or giving private medical insurance to someone already covered under their spouse’s policy. Provide a company van and allow a huge employee tax bill to arise, and this is negative value. In all of these cases, the appreciation – or lack of it – by the employee will bear no resemblance to the cost suffered by the business.
Allowing employees to shape their own remuneration package by selecting elements of reward that are of most value to them, means that they feel appreciated. In flexible packages, tax-efficient and salary sacrifice perks can sit together with other flexibilities, such as holidays, and voluntary benefits such as cash plans for dentist and optician. When you bundle schemes together under a flexible benefits scheme, the value of the individual components can be better communicated and understood. Many flexible benefits arrangements are self financing or generate savings for employee and employer by virtue of the tax-efficient perks incorporated including: pensions – taking employee contributions out of the national insurance net. (national insurance rates are due to rise in 2011/12.) Bus travel – employees can save up to 41 percent on bus passes in some circumstances. Travel & subsistence expenses – there are huge savings where employees travel extensively on business or to temporary workplaces. CO2 efficient cars – where the tax bill is far cheaper than that relating to the salary exchanged. We say that the answer is to communicate, use consideration – and be flexible.
