Are pension and retention mutually exclusive?

Why not read our latest blog post, Long-term absence dismissal not always unfair?

Back in 2009, the Chartered Institute of Personnel and Development (CIPD) reported on significant gaps in the way that managers identify and manage ‘reward-related risks’. The survey focused on the biggest challenges (or as CIPD says, risks) reported by managers in relation to the provision of reward.  Practitioners view these risks as the most likely areas where they will get things wrong.

This week the CIPD has delivered the 2012 version of the same survey that again focuses on the current perceived risks.  It seems that the top concern of rewards ‘practitioners’ is the fact that ‘employees don’t appreciate the value of the total rewards offering‘

New in the 2012 top ten risks is the cost of managing pensions (probably because of the Government’s pension auto-enrolment legislation).  So what does the 2012 top ten look like?

  1. Employees don’t appreciate value of total reward offering
  2. Reward not engaging employees
  3. Firms are unable to increase pay levels due to budget constraints
  4. Employees don’t understand performance and behaviour requirements
  5. Incentives are not motivating
  6. Inability to change reward practices quickly
  7. Inability to communicate desired performance and behaviours
  8. Reward is not perceived as fair
  9. Line managers have poor understanding of reward
  10. Increasing pension costs

To make way for the newcomer in the list, the current research shows that ‘attraction and retention of key employees’ has been replaced by increasing pension costs.  This suggests that managers are not seeing pensions as part of the retention and reward mechanism!  Perhaps benefits are being seen by managers as a cost, rather than as a key motivator and differentiator to enable recruitment and retention.  This cannot be right!

In July, we posted a blog explaining why firms should see pensions as a benefit, focusing on the added value that can be gained by treating the new requirements as a positive means of illustrating how great an employer a firm is.  As far as TimelessTime is concerned, pensions are very definitely a benefit to both employee and employer and they play a key role in recruitment, retention and motivation.

Common theme

Just exploring the CIPD report a bit more, and looking at the top 10, there is one dominant theme: communication is a real issue in the modern firm (illustrated by list items 1, 2, 4, 5,7, 8, 9).

The top challenge concerns a lack of appreciation by staff of their reward package value.  So what are we saying here?  That staff don’t understand how their total package is made up?  Surely, there is an onus on managers to communicate with staff to ensure that understanding –  Communication is fundamental to managing people and their expectations.

The concept of ‘total reward’ covers compensation, benefits, work-life balance, recognition, training, and development.  Delivery of communications on total rewards requires planning.  New methods of communicating the reward package need developing, with staff informed of all the total benefits they receive – not just their salary. Once these benefits are detailed and communicated, staff will have a much better understanding of their reward package.

Communications

Communications are a fundamental building block of the employee-employer relationship.  Many of the top ten can be managed (and hence reduced in importance and even removed from the CIPD list) by implementing a tailored and sensitive communications programme.

Employees want to be able to trust their employer.  The whole relationship is built on the unwritten expectations of both parties.  Where there is high trust, there is commitment, where there is low-trust, commitment is severely limited.  When it comes to trust through effort and reward, employees can only work with the information they have.  Therefore, managers must communicate properly!

Are pension and retention mutually exclusive?

So, in answering the question posed at the outset, pension provision and staff retention are not mutually exclusive.  There is correlation, if not causation – that staff retention depends, to a large extent, on the total rewards package offered.  Staff retention depends on employees’ valuation of the rewards.  Pension contributions, other benefits offered (tangible and intangible), should be viewed as tools to attract and retain – and these benefits should be communicated to all.

And they play a part in motivation too – but that’s a subject for another blog!

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