How can HR mitigate reduced perks budgets?
When company finances or market forces put pressure on businesses to tighten their belts, often one of the first items on the potential cut list are employee perks.
And we’re not just talking a cheaper brand of coffee in the break room and the cake trolly coming once instead of twice a week. Accountancy group UHY Hacker Young reported this year that corporate cost-cutting has made perks far less attractive for businesses to provide, and the number of employees receiving taxable job perks fell by 600,000 last year.
This includes benefits such as company cars, private medical insurance and even accommodation. With perks under pressure, so are rewards budgets and the budgets assigned to other employee incentive schemes.
But could increasing focus on recognition support HR teams maintain and even increase engagement, whilst managing reduced spending power?
Appreciation more valued than rewards for employees
It was a common and long-held perception that to motivate staff, and what employees favoured most were financial rewards and bonuses for work well done and targets met.
However, research over the last 10 years has showcased the stronger desire from workers to actually feel like their actions are noticed and being recognised for those day-to-day efforts.
This is particularly true of the younger workforce such as millennials.
A study by SurveyMonkey analysing the opinions of 1,500 American employees found that 82% are happier when they’re recognised at work and an important part of their overall satisfaction of being at work. Also, those who feel they are appreciated for the effort they put in are far less likely to be searching for a new job.
In fact, a study by Cicero found that employees themselves note employee recognition as their primary driver to deliver great work, 37% compared to just 7% for additional pay and 4% wanting a promotion.
Social scientist Dan Ariely sums it up well by saying: “When we are acknowledged for our work, we are willing to work harder for less lag, and when we are not acknowledged, we lose much of our motivation.”
Time & flexibility perks gaining traction
Another way in which HR can look to negotiate shrinking perks budgets is to instead focus on time and flexibility perks.
Offering employees the ability to work more flexibly, including from home or shifting work hours, as well as other time-related perks such as early hometime on a Friday or longer lunch breaks as a form of reward are all growing in popularity.
For some on the jobs market, they’re actually non-negotiable considerations. Research from KPCB found that flexible hours are the most valued benefit by almost 20% of workers they surveyed.
For example, one report form Decobo found that opportunities to learn and grow are so important that almost half of millennials would quit a job if they didn’t feel their personal knowledge was developing.
As a potential non-financial perk to offer, allowing time out each week to focus on self-development and learning could have a great impact on employee skills, their overall happiness and also their longevity with the company.
Whilst it’s never usually advisable to remove employee perks and benefits once they’ve been introduced, there are some viable and even more impactful alternatives for HR and employee engagement managers when it comes to motivating a workforce. Recognise great work, offer time and flexibility perks instead of financial ones and your teams will still pull in the same direction and look to continue delivering success for your organisation.