Business & Economy

Wednesday, 06 April 2016 08:40

SA Workforce Has Low Understanding of Benefits and Compensation

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Aon survey shows trends and key practices in communicating benefits and compensation

South African organisations are concerned about their employees’ understanding of their compensation and benefits package.  While 91% of companies communicate each individual’s compensation and benefits package to their employees, a staggering 65% of companies rate the understanding of these packages as low.

Aon Employee Benefits, the global talent, retirement and health solutions business, has released the findings of its EMEA Benefits Communication Survey for 2016.  The survey collected responses from 905 organisations across 28 countries, including South Africa, to provide an overview of trends in benefits communication across the APAC/EMEA region, demonstrating the importance that benefits play in attracting and retaining quality people.

The 2016 results show that 91% of organisations in South Africa were communicating on compensation and benefits packages, with the main goal of developing engagement and retaining talent. This is a marked increase from the 70% recorded in 2015 of companies that communicate to their employees on the topic.  The real shift, however, is in the manner and efficacy of such communications, which are receiving more focus and attention than before.

“We find ourselves in an economy that is under great pressure with limited available skill pools, making it absolutely essential that organisations get their communication right and that their employees are fully aware of what their remuneration packages comprise of,” says Ndivhuwo Manyonga, Executive Head of Aon Employee Benefits South Africa.

Two primary factors have positively influenced the state of benefits communications in South Africa – the “cost to company” remuneration approach and concerns about low levels of retirement savings. 

Many companies in SA are adopting a ‘total cost to company’ remuneration approach in an effort to manage costs.  “It allows a firm to budget and control its payroll costs much more effectively, without the risk of benefit costs spiralling upward, meaning that the cost is borne by the employee,” explains Ndivhuwo.  “While this approach may be beneficial to the organisation, the trend increases the need for organisations to communicate and educate their employees around benefits,” she adds. 

“Tools such as personalised Total Rewards Statements provide an overview of the full value of their compensation and benefits package, including seemingly hidden ones such as special leave, study benefits, wellness programs and such; enabling employees to make informed decisions when it comes to optimising their compensation and benefits package,” explains Ndivhuwo.

Within South Africa, low levels of retirement savings are also an area of concern. “The new legislations effected on 1 March 2016 which, among other things, aim to incentivise increased retirement savings. These are important changes that employers need to take heed of and which need to be actively communicated to employees in order to ensure their understanding of the implications of these changes,” she says.

“It is essential that companies engage a diversity of communication channels from traditional print media and one-on-one engagements, through to multimedia channels and digital platforms, to have maximum impact and cater for different employees,” she adds. 

South Africa’s survey results found the following:

  • - 91% of employers across South Africa currently communicate their employee compensation and benefits packages.
  • - 65% of surveyed companies consider their employees’ understanding of its compensation and benefits policy to be low.
  • - 52% of organisations communicate several times a year, showing a marked increase on the previous year, when 29% said the same thing.
  • - Last year the main objective was to respond to legal requirements, while this year companies declare they communicate to manage costs to the company and/or benefits flexibility.
  • - 42% of organisations use digital platforms as their preferred communication channel.
  • - 26% of surveyed companies will use total reward statement as their method of communication in future, with 22% using the employee handbook and 22% utilising face to face presentations in future.
  • - In future, companies anticipate continuing to use employee handbooks, while supplementing these with email communications and online benefits portals.
  • - 70% noted that they do not have a dedicated budget devoted annually to their employee benefits communications.
  • - Mirroring views expressed globally throughout EMEA, the largest part of companies in South Africa does not use an external provider to communicate their benefits package, with 71% of South African organisations managing benefits and compensation communications in-house.

To communicate effectively, Ndivhuwo suggests that organisations provide their employees with a comprehensive view of all their compensation and benefits.  “Frequently use simple, straight forward and easy-to-use communication across all media channels such as print, e-mail and digital platforms.  Your communication strategy needs to provide a clear explanation of complex topics and needs to be aimed at helping employees to understand their options and make the right decisions. A personalised approach is always helpful in addition to providing employees with the means to put the knowledge that they derive from your communication into action,” she explains.

“Corporate South Africa spends billions of Rands on employee benefits each year that can add anywhere from 25 percent to 50 percent to an employee’s annual cash compensation.  It is critical that benefits communication is effective, or you risk employees disregarding the ‘hidden value’ in their salary,” concludes Ndivhuwo.

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