Sunday Business Post - Recruitment Pages - Feb 4th 2007
A company car and a Christmas bonus are no longer enough to impress staff, and companies are having to be more imaginative to come up with new ideas, writes Dermot Corrigan…
Employers keen to attract strong candidates in a competitive labour market are taking an increasingly innovative approach to the humble perk.
Although the validity of the benefit package as an aid to staff recruitment and retention is unproven, Letrecia Tippett, financial recruitment division director with recruitment group Premier, believes it goes a long way towards keeping staff content.
“It is very hard to know whether if you give somebody extra benefit they will stay or leave, but it is a factor in their general wellbeing and happiness,” said Tippett.
Flexible Benefits
Traditionally, discussions on benefits and perks centred on monetary valued extras such as health insurance, pension plans and company cars.
However, a new wave of staff benefits which are more concerned with softer ‘quality of life’ issues like flexi-time, extra holidays, or training and development opportunities.
“Flexibility around those kinds of things breeds a culture where people genuinely like coming to work,” said Tippett. “To tangibly measure the culture is hard, but if you have really low attrition then that must be a factor.”
To secure the best candidates available on the market, Tippett said employers in Ireland needed to be aware of the increasingly competitive recruitment market in which they operated.
“People have a lot of choice at the moment,” she said. “While a gym membership is not going to be the defining factor, it may give an indication for somebody of the particular culture within a business that may not be elsewhere.”
Lisa Rogerson, senior banking consultant with Brightwater Recruitment, said employers in Ireland were reacting to the tight labour market by talking to their employees to find out which benefits they are most interested in.
“Companies are carrying out surveys with their own staff to find out what extra benefits they would like introduced,” said Rogerson. “People tend to be happier and stay if the company listens to what is important to them.”
Work/life benefits are particularly appealing to people who have reached an established stage in their career, where they are no longer interested in regular job- hopping. Their priority is an employee-friendly company that understands their long-term priorities.
“When it comes to the third or fourth move in an employee’s career it is no longer all about the money, it is more about the lifestyle, the role and the benefits packages that are on offer to them,” said Rogerson.
Patricia Callan, the director of the Small Firms Association (SFA), agreed that the key to retaining important staff was not just down to the fail-safe salary hike.
“Surveys we have done around retention have shown that money is not a factor at all,” said Callan. “It is very much about how you are actually treating your staff, in areas such as career paths, recognition, training opportunities and job satisfaction.”
Taxation
Callan said that there had been a tightening up of the way benefits were considered when calculating both PAYE and PRSI payments.
“The taxation regime has got quite rigid around benefits and perks,” she said. “Benefits such as profit sharing and your company car are taxed the same as if you got them in cash, so we are seeing a lot less of that. Before benefit in kind did not attract PRSI, whereas now it does.”
The current system also considers benefits such as bonuses, stock options, commissions, health insurance, life insurance, mortgage allowance and gym membership as part of the total salary package, and taxes them according to their calculated monetary worth.
This approach has encouraged employers to look at new and innovative ways of rewarding their staff. Benefits such as additional holidays, extra paternity and maternity leave, flexible working hours, working from home, educational opportunities and mentoring programmes are not subject to taxation, and are therefore an attractive option for both employer and employee.
Other traditional perks - such as subsidised canteen, the provision of working clothes or uniforms and subscriptions to professional bodies - are not taxed. Special rules apply to some benefits-in-kind such as company car, loans and the provision of living accommodation.
Activities
For more imaginative employers, Rogerson said evening classes were becoming an increasingly popular staff perk.
“A lot of the larger companies are bringing in maybe a yoga instructor or Reiki instructor onto the premises once a week to run an in house course,” she said. Other novel options include wine tasting and salsa dancing classes.
Rogerson said imaginative and innovative benefits like could improve the atmosphere within an organisation, enabling staff working in different areas of the company to mix in a relaxed environment.
Career Development
Career development options are also popular with staff, and companies can also benefit from training and upskilling their employees.
“The opportunity to further develop themselves is always an incentive for people,” said Tippett. “It is something that most Irish businesses are very happy to offer. Employers investing in courses and development programmes for their staff, will assist their business at the same time.”
Menu of Benefits
Companies can find that different staff will look for different benefit options, depending on their own individual circumstances and career ambitions. It can be difficult to implement a company-wide bonus scheme that caters for the different tastes and career stages of their staff.
Over the last year, some Irish organisations have started to introduce a new feature to meet this challenge. The ‘menu of benefits’ gives the employee a set amount of money that they can then spend on a selection of benefits that suits them.
“They say we are going to give you €700 towards your benefits and you can define how the company uses that money on your behalf,” said Tippett.
“You get to choose a benefit that directly affects you. If you don’t like to travel, then travel vouchers mean nothing. But if you are a great traveller, then it is one of the best things that you can have.”
While this might be seen as difficult to administer effectively, many modern HR software packages include this functionality, and staff can often log on to a self service menu and pick and choose their benefits almost like buying books or CDs online.
Organisations can sometimes operate these benefit programmes on a reactive basis, and decide to introduce a particular perk when the market decides they need to.
“A lot of people who have had problems in attracting and retaining key staff tend to react on a request basis, rather than a company deciding that they are going to establish a set policy,” said Callan.
However, once they go along with their employees’ requests for benefits such as flexi-time and home-working, companies can find that there are real cost savings and efficiency gains involved.
“The average cost for having someone in an office in
“These also allow people to avoid commuting time and become more productive at work.”
The setting up of a home office is not viewed as income for the purposes of taxation, instead it is seen as a business expense.
“As far as I know the Revenue Commissioners haven’t actually looked at it yet. It is more like office expenditure,” said Callan.
Teething Problems
Cultural changes brought about by these benefits can cause teething problems in some organisations.
“It involves a change in management style,” said Callan. “A lot of managers like to see people physically doing things, whereas you need to be able to measure more in terms of output and productivity.”
Rogerson said that staff are very aware of what benefits and perks other employers are offering and can specifically ask for certain things – such as extra holidays or flexi-time – when evaluating different potential employers and job offers.
“I think that employers are recognising that they have to be able to differentiate themselves, because people have a lot of choice at the moment,” said Tippett. “It is now a fairly even footing, so employees are saying you have to give us something back too.”
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