Whatever the benefits package, communication is critical to its success and should be clear, regular, tailored to the audience, and ideally two-way, receiving and taking notice of feedback. Organisations may have a generous, fair and innovative reward system but if it is not well-communicated it will have little or no impact on recruitment and risk employee retention and productivity.

Employees relate financial reward to their financial wellbeing. In the CIPD's Employee Outlook Autumn 2016, a benefits package that includes retail discounts is ‘most important’ to only 9% of survey respondents. Fair reward (a consistent and open employer approach to pay rises, bonuses and promotions) is ‘most important’ to 54%.

Is pay still private?

However, most companies still consider pay as a private matter, and only provide pay information when required to do so by legislation (e.g. the 2017 Gender Pay Reporting Requirements). Well over half of employers surveyed told the CIPD they "very much preferred to keep pay information as confidential as possible”.

This represents a missed opportunity to communicate how employees have been, and can be, rewarded for contributing to business success – the point of the exercise.

“We are unable to explain why more employees don’t receive an explanation for a pay rise,” says a clearly baffled CIPD. “This finding is odd given that [surveys show] a relationship between employee satisfaction with the decision and receiving an explanation for that decision.”

Risks of poor communications

Communications is thus a major issue for pay and reward at every level. HR professionals identified the main risks in managing reward systems as:

  1. employees do not appreciate value of total reward offering
  2. reward failing to engage employees
  3. inability to increase pay levels due to budget constraints
  4. employees do not understand performance and behaviour requirements
  5. incentives do not motivate.

The top ten risks also included “inability to communicate desired performance and behaviours”; ”reward not perceived as fair”; and ”line managers’ poor understanding of reward”, underlining the internal communication challenge.

The introduction of auto-enrolment for new workplace pensions provides the ideal opportunity to communicate your organisation’s total reward packages in terms of pay, benefits and non-financial rewards.

It also provides an opportunity to provide financial education to help staff understand and value what the organisation can offer.

CIPD research finds that nearly three-quarters of employees say their organisation offers no form of financial advice. However, over half of its survey respondents (employers) indeed do offer access to debt advice and/or counselling, underlining that employers should not take for granted that all employees understand the true value of reward packages on offer.

For more information on this and other people management topics, visit workpocket world.