Employers across both the public and private sector fear that they are no longer able to offer the pay and benefits packages required to attract and retain key skills, an HR body has warned.
Number two on the list of concerns relates to the ability of line managers to administer such rewards, while the number three worry was whether the pay and benefits currently under offer are enough to engage staff effectively. Many employers were also alarmed that they were not in a position to change current practices even if they wanted to.
Research entitled ‘Managing Reward Risks: An Integrated Approach’ undertaken by the Chartered Institute of Personnel and Development (CIPD) revealed that 15% of respondents believe their organisation is poorly prepared to deal with such threats, up from 9% last year. The same number claimed that they were well prepared to meet such challenges, however, down 2% from 2009.
Charles Cotton, performance and reward advisor at the CIPD, said: “The past 12 months have been a turbulent time for many employers in terms of pay and benefits practice. They are fearful that the way that reward helps them attract, retain and motivate employees is no longer appropriate.”
While the private sector was concerned that current rewards would not help them if economic recovery was sustained, the public sector was worried that their practices would be unhelpful as their economy started to move into decline, he added.
Over the year ahead, however, the biggest concerns were rising pension costs, followed by insufficient cash to meet reward commitments, poor industrial relations and tax changes that could hit pay and benefits.
Jonathan Chapman, a management education fellow at Cranfield School of Management and co-author of the report, said: “Changes to how employee pay and benefits are taxed are of major concern to all employers who fear the changes will make it harder for them to compete effectively to recruit and retain valuable talent. These and other changes have also placed an additional burden on reward professionals, with many struggling to manage.”
This meant that a planned response to increasing risk levels was required to ensure that reward played a key role in ensuring that organisations could thrive into the future, he added.
