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Annie Hayes

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HR responsible for growing fear over benefit cuts

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One in three employees expects a cut in their benefits package this year and HR is being blamed for poor communication.

Research involving 300 HR professionals by pensions and employee benefits consultants, Hymans Robertson, suggests that HR may not be communicating effectively with employees about benefits.

Over 95 per cent of employers have no plans to cut benefits, which are at odds with employee perceptions of what to expect in the year ahead. In fact, 45 per cent are planning to enhance benefits in 2008.

One in 10 employees also fears cuts in their pension yet only two respondents or less than 1 per cent of those surveyed foresees this outcome.

In further bad news, only one in 10 of employees think that their benefits package is above average.

Holidays top the poll (93 per cent) of benefits that are most valued, closely followed by pensions (73 per cent).

Age does play a part. In the 16-24 age group, company cars, season ticket loans and dental insurance are popular, with just 40 per cent citing pensions as important.

Whilst 30 per cent of employees of all ages don’t expect a pay rise in 2008, 84 per cent of HR expects to maintain or grow their remuneration budgets. Businesses based in London are the most likely to offer an above inflation rise (41 per cent).

According to the report, there is a marked divergence of opinion between HR directors and ‘shop floor’ HR managers.

Nearly two thirds of HR managers think their benefits budget will be maintained at current levels in 2008, but nearly two thirds of HRDs see budgets growing.

There is also little consensus about what constitutes a ‘real’ pay rise. Nearly half of all HRDs believe that there will be a bigger pay budget in 2008, but only 34 per cent of HR managers think the same.

Whilst 55 per cent of HR managers believe that salaries will only be maintained in real terms, only 39 per cent of HRDs agree. Half of the HRDs expect an increase in headcount, but only a quarter of HR managers.

Hymans Robertson partner Clive Fortes said: “A quarter of all the employees admitted they had no idea about whether their benefits had increased or decreased last year. The study shows the level of disconnection between HR professionals’ views and plans and employees’ expectations. Regular, open communication about remuneration between HR professionals and employees is crucial.

“An organisation may have a competitive, well structured benefits and remuneration strategy, but employers have to know this to understand the value of their reward package. Good communication about pay and benefits should be integral to HR activity.”

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Annie Hayes

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