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Employee benefits: are you underestimating their value?
When talking about ‘employee worth’, the go-to thought is often salary but are you underestimating the hidden value of employee benefits?
Think of your last annual pay rise. How much was it? As much as you expected? Did you even know what to expect?
According to recent reports, it’s very likely to have come in at around 3%. So if you were to earn £30,000 a year (pre-tax), that’s an increase of £900; bringing you to £30,900 (pre-tax). With figures like these, it’s little wonder that there is so much discussion about the annual pay rise and its evolving significance. Simply put, the promised value of salary alone is not necessarily doing enough to keep people motivated and committed to their employers.
While salaries generally continue to increase year on year, this growth is beginning to slow and, in some cases, plateau. Indeed, PageGroup’s research reveals that from 2008 - 2010 to 2011 - 2013, the average salary increased by 2.5%; while from 2011 - 2013 to 2014 - 2016 it increased by only 0.9%. That’s growth slowing by over half its previous rate.
In fact, despite recent forecasts that employees were set to receive the biggest salary increase in years in 2016, our research shows that average salaries were the same at the close of 2016 as they were in 2009, just post-recession. That’s not much progress in a seven-year timeframe.
So if it’s no longer possible to rely on annual salary increases alone as a considerable, or at least reliable, source of additional income (or marker of progress) each year, what is the secret to boosting your employee package and your worth as an employee?
A key consideration nowadays is benefits – something that employees often overlook despite their monetary value. Indeed, according to a survey by Aon Consulting, 96% of employees underestimate the amount their employer spends on their benefits – with four in 10 (42%) believing it is around 5% or less of employees’ salary when, in fact, it is typically between 20 and 40%.
That’s the equivalent of multiplying your current salary by 1.2 (significantly more than a 3% pay increase, which would equate to multiplying your salary by just 1.03). If we look at that £30,000 salary again, that brings the total of your employee “value” to around £36,000. While it may not be a pay increase, it goes to show the benefit of benefits…
So the question is: are you too focused on how much your annual pay rise is worth and not enough on the value of benefits? When was the last time you even considered what your benefits look like?