Future is in the perks

New research has confirmed the downturn is having an effect on salaries and according to Susan Heron, chief executive of the Australian Institute of Management (Victoria and Tasmania), non-salary benefits have become a key battleground for employee recruitment and retention.

“Companies need to regard non-salary benefits such as a good workplace culture, flexible work arrangements, childcare support and health and wellbeing programs as competitive weapons in the battle to attract and retain the people their business needs to prosper in the long term,'” Heron says.

AIM’s latest salary survey of 759 companies shows that in the past financial year salaries rose by an average of 4.3 per cent in large companies and 4.6 per cent in small companies.

These figures are down on last year’s survey results in which large companies recorded a 4.7 per cent average salary increase and small companies a 5.2 per cent rise.

Heron expects next year’s salary survey results to be grim because aside from redundancies we are seeing companies electing to freeze salaries.

“With money tight, the non-salary component of a person’s package or employment conditions becomes critical in a bid to attract and retain the best employees,” she says.

Heron says it is vital that companies work extra hard to effectively engage with their best employees about business direction and their firms’ competitive strengths.

“Those companies most exposed to losing their best talent are the ones that haven’t worked hard enough during the boom times to get their business model right and haven’t thought ahead about the skills and capabilities they need,” she says.

“During the boom, we saw lazy companies come to rely on salary rises as the key means of attracting and retaining skilled people. In effect, these companies used salary as a means of diverting attention away from their poor performance on non-salary benefits.

“Engaging with employees and developing non-salary initiatives that work for employees and benefit the company’s bottom line is hard work. You need constructive and honest discussions with your people about what their non-salary expectations are and what the business can accommodate before you can get an integrated set of arrangements in place.”

Companies that are faced with a tight money supply and are focused on internal restructuring and cost reductions can lose the confidence and commitment of employees.

According to Heron, “In such circumstances, the most skilled and talented people are those ones who will leave first.”

Australia’s ageing population means we face long-term skills shortages and Heron says smart companies understand this and recognise highly skilled people are never easier and cheaper to recruit than now.

Arlene Reid, human resources manager at Melbourne Racing Club, says a commitment to addressing the wellbeing of its employees and fostering a spirit of family have been vital to the club’s ongoing success. This financial year staff turnover levels averaged 10 per cent, which Reid says is very low in comparison to other organisations.

In what is a challenging and uncertain economic climate for all employers, the provision of non-salary benefits has become increasingly relevant as an ingredient in the recipe for employee recruitment and retention success.

Melbourne Racing Club is a diverse business employing 180 permanent and 1500 casual employees across two racecourses.

“A major success story has been our employee assistance program, which offers a network of compassionate non-financial considerations and support to staff and their families experiencing difficult personal circumstances,” Reid says.

The club also offers a range of other programs such as social events aligned to charitable causes, weekly fresh fruit and milestone service awards.

BMD Group is Australia’s largest privately owned civil construction and urban development organisation. It employs more than 1200 staff across Australia and has had a long-standing policy of providing a wide range of non-salary benefits to all employees.

The main initiative is a national good health and wellbeing program that incorporates subsidised group fitness classes, dietician consultants, health assessments, quit smoking programs, participation in fun runs and corporate charity events.

BMD founder and managing director Mick Power says the highlight each year is a national beach volley ball competition hosted by its good health and wellbeing ambassador, Olympic gold medallist Natalie Cook.

“In addition to this program, staff have the opportunity to [use] corporate entertaining facilities at major sporting events and venues [and] use a choice of Gold Coast units for weekends and holidays,” says Power.

Mark Holroyd, remuneration and benefits manager with Victoria’s Transport Accident Commission in Geelong, says non-salary benefits promote employee satisfaction and retention.

“Just offering a high salary may get them in the door but it takes more than just cash to keep them,” Holroyd says.

“It is also important that non-salary benefits are tailored to what employees value. A baby boomer is going to be much more interested in salary sacrificing superannuation, for example, that a gen Y employee; they might be more interested in flexible working arrangements.

“We also offer a number of lifestyle boosters to all employees, including a comprehensive health and wellbeing program, a 48-52 leave option and deferred salary scheme. There is also the option to salary sacrifice for novated lease vehicles, superannuation or work-related education.”

Heron says innovation is fundamental to the health of every good business; it is not an optional extra.
It allows companies to tap into the creative talent of their employees and achieve smarter and cheaper ways of doing business.

“A positive workplace culture is not a cost item. A healthy culture is linked to the company having a clear sense of business direction, involving employees in shaping that direction and getting their commitment to help achieve goals identified,” she says.