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Training beats pay rises for employee rewards


Companies across Europe are planning to invest more in training and development and less on basic pay increases next year according to a European-wide survey by Mercer Human Resource Consulting.

The survey of more than 430 companies in Europe, mostly multinationals, found that only 16 per cent of respondents are planning to increase their investment in base salary rises next year. In contrast, 58 per cent say they will spend more money on training and career development initiatives for their staff.

Other aspects of employee rewards that will attract little extra investment next year are retirement and healthcare benefits, with 16 per cent and 20 per cent of respondents saying they will spend more money on these benefits respectively.

Instead, 32 per cent of companies say they will invest more in annual cash bonuses and 44 per cent said they would invest in non-cash rewards.

Paul O’Malley, principal at Mercer, said: “Many organisations are reluctant to invest more in base pay increases because they do not want to raise their fixed costs.

“By focusing on training, non-cash rewards and bonuses, they retain the flexibility over their investments, and can ensure the highest rewards go to the top-performing employees.”

He added: “By investing in employees’ careers, companies can build the capabilities to fill crucial skill gaps internally, rather than go through the costly exercise of hiring new people.

“From an employee’s perspective, training and development opportunities are often of as much interest as the contents of a pay packet, if not more so.”

Employers are most concerned about attracting and retaining talented employees over the next year, with 83 per cent reporting that this was a very important issue.

Differentiating rewards for high performers was ranked as the second biggest challenge, with 65 per cent rating it very important.

Only marginally less important were implementing reward strategies that underpin business goals and ensuring pay is linked to performance, rated very significant by 64 per cent and 63 per cent of companies respectively.

At the other end of the spectrum, just 11 per cent of companies felt that adapting their employee rewards packages to meet the needs of an ageing workforce was an important challenge.

Increasing the choice of benefits available to staff and responding to their preferences were also towards the bottom of the list of priorities, both rated as very important by 16 per cent of companies.

O’Malley commented: “It is surprising that companies are not more concerned about adapting their rewards programmes to suit older workers.

“Many organisations rely heavily on the skills that their older, more experienced staff bring to the workplace, yet the rewards packages they offer do little to engage these employees.

“Offering more flexibility around benefit choices and working conditions can help attract and retain workers of all ages.”


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