Rainer Schmidt: Benefits – An important factor in employer branding

Positioning a company as an attractive employer is increasingly becoming a strategic success factor in the recruiting and retaining of employees. The benefits package offered plays an important role in employer branding.
“The right benefits can tip the scales for me when I decide on an employer,” say almost 90 per cent of employees. How­­ever, only 27 per cent are complete­ly or mostly satisfied with the benefits of­­fered by their employer. This result was presented in the Benefits Study 2008 by Watson Wyatt Heiss­mann. Ben­­efits thus still have a great deal of po­­tential as a vehicle for effective em­­ployer brand­­ing.

In order to actively use benefits packages for positioning as an attractive em­­ploy­er, two valid points should be taken into account.
For one, the benefits offered must be interesting in the opinion of current and future employees. For another, the compensation payments that, in some circumstances, do not recur as a month­­ly salary deduction should be adequate­­ly administered and their uses to the em­­ployee should be clearly communicated.


Most interesting benefits
In the view of employees, benefits in the areas of personnel development/employ­­ability and work-life balance find the top spots on the list of favourites. Continuing education opportunities and flexible work times are high on the list, as the quoted study impressively demonstrates. Em­­ploy­­er-financed retirement benefits follow di­­rectly thereafter as the most important monetary benefit. With an agreement of over 60 per cent it beats the asset creation services and occupational disability insurance. Employer-financed retirement benefits also secures a place for itself in the top ten list with around 44 per cent agreement. On the other hand, status ben­­efits such as a company car or Black­berry rank only in the middle to low range.

The benefits study also shows: There is widespread agreement among different employee groups when asked about their favourite benefits.
The basic need for additional benefits is similar across all age levels and qualifications. Of course, there are variations. For example: As employees get older and earn more, the importance of retirement benefits rises accordingly. But more than half (56 per cent) of 21 to 30-year-olds also find the prospect of an occupational pension attractive – although retirement for them is still far in the future.

Offer advantages to employees
Despite all these commonalities, it is im­­portant to remember: Benefits are only interesting to employees if they actual­ly fit their needs. So, for example, a spot in company-run day care is only advantageous to those employees who need child care services. That can be a com­­pet­­itive advantage in winning and re­­tain­­ing employees from this group. For a child­­less single employee, in contrast, this option would be irrelevant. In order to be able to shape the benefits package towards a targeted goal, it is indispensa­ble to know the employee structure and their needs. For a heterogeneous staff, offering flexible benefits, if applicable, can be successful (such as a cafeteria system). It is sensible to take the individual life circumstances of the employees into account as far as possible, es­­pecially with regard to company retirement benefits.
A selection of options is available to guar­­antee this, whether for risk protec­tion, dis­­bursement methods, or capital invest­­ment. For example, an employee who owns a home and would like to re­­model at the beginning of retirement may want to se­­lect a one-time retirement cap­­ital ben­­efit rather than a lifelong pension.
In addition, the attractiveness of bene­fits is grounded in financial advantages. Both employers and employees profit from company retirement options with regard to taxes and social security con­­tributions.
Favourable conditions for employees can also be negotiated through combined agreements or skeleton contracts. Even if em­­ployees pay for the services them­­selves, these offer a financial ad­­vantage. Employees also appreciate this, as the benefits study shows. Around 70 per cent of those questioned are com­­plete­­ly prepared to give up part of their cash payments in exchange for interesting benefits.


“Employer advertising”
via communication of additional benefits
In practice, however, many employers offer privileges that employees take no notice of. For example, employees of­­ten first become involved with insurance serv­­ices only when, for example, they have suffered an accident. Most com­pa­­nies do list their additional benefits in their work regulations. However, em­­ployees often first learn of these when they ask about them on their own initiative or read through the long document themselves.

In the sense of active employer branding, it is not enough to have an attractive benefits package ready. It is much more a matter of making those advantages known within the company. This can be done, for example, with general information brochures, internet presen­tations and so forth. Total Re­­ward State­­ments can also be offered, which are created for each employee individually.

Benefits represent an es­­sential element in com­pen­­sation packages for the em­­ployee as well as an im­­por­­tant factor in em­­ploy­er branding. In the planning of benefits packages, it should be ensured that the benefits offered corre­­spond to the wishes and needs of the employees. In addition, it is important to optimal­­ly design the com­­muni­ca­­tion and ad­­min­­istration of the offerings.

(This article was created in collaboration with Nicole Pilger.)


schmidtRainer Schmidt is chairman of the board of Watson Wyatt Heiss­­mann, Wiesbaden. The consulting firm, among other things, develops individual solutions for company retirement benefits and integrated total rewards management. Watson Wyatt Heiss­­mann is part of Watson Wyatt World­wide, a leading consulting company world­­wide in human resources and financial management.