How benefits can help solve the productivity puzzle

The productivity puzzle
The productivity puzzle

It is generally accepted that Great Britain’s output per hour is lower than the economic powerhouses of Germany and the US, yet to find that we are also lagging behind the industrial-relations blackspot of France - or the failing economy of Italy - comes as a rather nasty shock. In fact the only member of the G7 we outperformed on this criterion is Japan – an economy that has been in trouble for many years. It’s a puzzle that has been exercising many minds.

So what is to be done? It’s not as though employers can throw a switch and magically improve productivity, but there must surely be some small steps that can be taken to start the process?
One such option is employee engagement. In simple terms an engaged employee is one who will go the extra mile in his/her job on a regular basis. It has been suggested that the difference to the employer’s bottom line between a very disengaged and highly engaged workforce is an improvement of more than 50% in operating income. And if that is a bit nebulous for you, then a more direct correlation can be found in absence rates. Highly engaged employees take much less sick-leave than their disengaged colleagues (2.7 and 6.2 days per year respectively).

So engagement could be a key component of the productivity puzzle, but where to start? Paying higher salaries is one option (and the UK does pay poorly compared to many of our European neighbours), but a major salary increase for all is going to be a big ask for employers. So how about improving other aspects of the remuneration package instead?

Which takes us to employee benefits. Organisations of many sizes spend money on a variety of employee benefit offerings. When properly utilised such packages can improve staff retention and recruitment, lower absence, protect key human capital assets and act as a powerful engagement tool. The problem is that a significant number of UK employers don’t regularly communicate the value of their benefits to employees. By this one omission employers may lose many of the employer positives – particularly the engagement piece.
So good consistent communications are key to this process. Below are three other ideas that employers of all sizes might also want to consider to improve productivity:

• Target all employees
Different people have different needs and expectations. So seek to build a package that has attractions to all grades and ages.

• No benefit is too small
Some benefits cost very little, and provide correspondingly low levels of cover. Often they are overlooked in favour of the more expensive items, yet these can be the key components to make a benefits package appear more than the sum of its parts. Examples that fit this mould are Employee Assistance Plans and Healthcare Cash Plans.

• Health benefits
Most importantly, remember that some benefits are a genuine win-double for the employer. Any benefit that targets employee health and wellbeing – be it free-fruit Fridays or a fully funded Private Medical Insurance offering – can engage employees as well as improving staff health and reducing absence.
The bottom line is that UK employers urgently need to tackle the productivity gap, and a better structured and communicated use of employee benefits should perhaps be the starting point for such an exercise. Or to put it another way, can the UK afford not to do this?

Steve Herbert, Head of Benefits Strategy, Jelf Employee Benefits is an engaging and forthright leader on Pensions and Employee Benefit issues.

His principal aim is better communicating the value and usage of employee benefits to employers. Steve is also a regular contributor to DWP forums and a compulsive responder to formal Government Consultations on pension and employee benefit issues.

He is occasionally accused of making employee benefits interesting.