Businesses should not rush to scrap employee benefits and rewards despite challenging environment

Charlotte Geesin, Chief Legal Officer at Howarths, the people consultancy specialising in legal, safety and growth services, considers the implications of removing rewards and benefits from the workplace.

“Are we at risk of losing employee rewards and benefits?

“It is a fair question considering businesses are starting to feel the true financial impact of the National Insurance and National Minimum Wage increases, which came into effect in April. What’s more, they are also operating in a challenging macroeconomic climate.

“Early indications from our business community suggest that they are holding firm. Thanks to planning and budgeting, they are reticent to make major changes to rewards and benefits until they can understand the short and long-term implications.

“However, we cannot deny that it is a tough time for business, and many have no option but to continue to look at ways to make cost savings, without impacting negatively on performance, results or morale.

“Every business is different. What works for one in terms of cost-cutting may not work for another. One thing is for sure: if changing rewards and benefits is a key consideration, organisations must be aware of the impact this may have on recruitment and retention and that, fundamentally, communication is key!

“No employer is immune to the rising national insurance costs, and benefit packages are not guaranteed – employees know this too, and this could be a deciding factor when looking to stay or move to a new employer.

“Another area that is helping employers to see the positive impact of benefits is through the changing workforce.

“For the first time, we have five generations in the workplace, who all have different motivations that are not always determined by salary.

Regardless of age, life experience or position within the company, you want the fundamentals – to feel secure, valued and that you have a purpose. For more tangible bits, such as benefits and rewards, there is a split across generations.

Each generation has its own individual experience and desires when it comes to the workplace.

If you compare a baby boomer nearing retirement, they are very experienced and have shown loyalty to an organisation, so they’re going to value things like pension, retirement plans, job stability, recognition for their experience and the chance to mentor.

“Whereas the other end of the spectrum, Gen Z, they’re coming into the workforce after COVID, and all they’ve experienced is global financial trauma. Their views are very different. They’re going to want opportunities to learn, and immediate support with finances.”

“With this in mind, before changes to benefits and rewards are made, time needs to be taken to understand these motivations and what’s right for your colleagues.

“We cannot deny that we are operating at a challenging time. For some businesses, cutting rewards and benefits may be the only option they have if they want to continue trading. In these instances, communication is critical. The rationale needs to be explained to obtain employee buy-in, to minimise any negativity and to maintain an engaged team.

“It’s a tough call for business, but one that requires clear thinking and the need to understand the real value that rewards and benefits have on our colleagues and businesses now and in the future.”