Hard work can be worth it simply for the perks of the job but how can employers be sure they are offering the right incentives to staff? Louise Druce finds out that there’s more to reward schemes than a token pile of cash – although sometimes that would be nice too!

Job perks can often sway the balance when deciding whether to take on a new role but employers are now shelling out on staff reward schemes to retain staff they already have, as unmotivated workforces and high turnover rates prove a costlier drain on resources, running into billions.

The thorny issue is identifying where and when reward schemes are appropriate, and choosing add-ons that prove beneficial for both employer and employee. It’s not simply a case of offering a token pay packet boost.

“Companies should be encouraged to understand that people have different needs and many are surprised to learn that people are not purely motivated by money,” explains Ian Rummels, founder and managing director of employment specialists PES. “Many employees would welcome a salary sacrifice, whereby they exchange part of their salary for, say, gym membership, childcare support or extra holiday. Others may appreciate flexible working hours, whether through completing core hours with flexible start and finish times, or through a job share.”

Finding the treasure spot

Before tackling the issue of what rewards would suit best, Rummels argues the first step to dealing with a motivational problem is understanding there is a problem in the first place. This can be identified through reviews of the company culture as well as the people. For example, management might have a very different view of the business than the rest of the workforce and an evaluation will highlight these discrepancies.

Once the areas that could benefit from rewards have been identified, firms need to look realistically at what they can offer. There are many options and not all extra perks equate to extra costs. In fact, they may even save money, Rummels argues. For instance, the childcare voucher scheme his company runs is exempt from national insurance.

Richard Purchase, chief executive of Insight Human Resource and Management Consultancy, says the vast majority of his clients are moving towards ‘total rewards’, which take into account the whole renumeration bundle. It functions as a ‘menu’ of benefits, such as the ability to buy or sell annual leave, discounted gym membership, flexible working or the opportunity to enhance pension arrangements by private health care; written into a package that employees can select from.

“The most important thing is to see it as a total package and not to cherry pick your way through as it becomes very expensive and ad hoc,” he warns. “You have to look at salaries, terms and conditions of service and contractual arrangements, and not piecemeal.

“The second issue is you have to be clear about what your cost envelope is. The difficulty for employers is it’s very easy to put things in a package and if there is a very high take-up, the costs can run away with you.”

The issue of cost is particularly pertinent for smaller companies, which may feel unable to afford expensively elaborate flexible packages. But, again, they do not necessarily have to be expensive and complex.

“By introducing an element of flexibility with, for example, childcare vouchers or extra holiday days, the positive impact on staff satisfaction and retention can help save money overall,” says Malcolm Bond, a reward consultant at PES. “While smaller and medium-sized businesses may not always be able to compete with larger companies in terms of salary and expensive benefits, by offering choice and a little bit of imagination, less cash-rich organisations can become ’employers of choice’. People will often choose the correct work-life balance over a little extra cash.”

Where’s the incentive?

Web communications agency Net121 has a number of elements in its employee incentive scheme. They include performance-related cash bonuses, the use of the company car at weekends by the employee of the week and use of the company allotment, as well as subsidised gym membership and staff social days out after high performance months.

It states five key reasons for initiating bonus schemes: having a realistic knowledge of how to increase productivity through tailored staff psychometric tests, to foster an atmosphere of friendly competition, to provide concrete financial and psychological rewards to encourage individual effort, to provide employees with measurable goals and self-assessment methods, and to increase productivity in an ‘organic’ and cooperative way.

“As our business develops at a fast rate, the requirement for good, enthusiastic and company-minded employees has become more and more vital,” explains William Berry, managing director of Net121. “We are realistic and understand that to gain and retain the best staff we must provide something different for our employees.

“We introduced reward schemes not just to incentivise staff into performing exceptionally but to reward the employees who achieve great things within the company. We work hard to create a culture of transparency where people feel rewarded with experiences and monetary bonuses but also by the feeling that they have been recognised by their colleagues for their hard work.”