Out-Law News 1 min. read

Tailored reward packages 'can help meet recruitment challenge'


Employers should review their reward packages and bonuses to ensure they match business strategy and encourage staff retention as unemployment rates remain low, an expert has said.

Employment law expert Suzannah Crookes of Pinsent Masons, the law firm behind Out-Law.com, said the findings of a survey into the UK’s labour market noted some positive trends but outlined a number challenges which the current climate poses for employers.

The Chartered Institute of Personnel and Development’s (CIPD) latest labour market outlook (24 page / 4MB PDF) shows that the net employment balance - the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff - is at +23.

At the same time, the number of applicants for each vacancy has fallen to a median of 20, compared to 24 in summer 2017. However wage growth remains subdued with median basic pay rise expectations of 2%.

Crookes said the survey confirmed a “generally positive” trend of low unemployment rates.

“However this can also present recruitment challenges for employers, with evidence of falling labour supply, and in this context, both recruitment and retention of staff will become a key focus,” Crookes said.

“With the survey also highlighting issues of pay stagnation, the wider reward package will be important in attracting and retaining talent. With uncertainties in the economy set to remain for a period of time, this may be a good opportunity for employers to review their reward packages to ensure these are tailored to business strategy and effective in delivering benefits which are truly attractive to the workforce,” Crookes said.

The CIPD has published a ‘Practitioners’ Guide’ (11 page / 260KB PDF) alongside the survey results, which provides recommendations for ways to combat the problems caused by the current labour market.

Suggestions include improving line management to increase productivity, making better use of technology, and offering non-financial benefits if wages cannot be increased. Recruiters should also take a broader view on transferable skills, according to the guide.

“The ‘Practitioners’ Guide’ suggests performance bonuses as a useful tool to motivate the workforce, and rightly also points out the importance of non-financial benefits,” Crookes said.

“In this area, properly designed equity incentives can also be a valuable part of the offering.  Through the use of share awards, employers can not only deliver additional value in the reward package, but also improve employee engagement through linking value to business success,” Crookes said.

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