Employee Engagement

Businesses have been warned not to overlook the importance of attraction and retention of key people, as a new Chartered Institute of Personnel Development survey finds firms are more concerned that benefit packages are engaging and motivating.

Reward adviser at the CIPD Charles Cotton claimed it is "encouraging" to see firms thinking "more strategically" in terms of rewarding the behaviours and performance that contribute to business success. However, he noted that attracting and retaining talent is "always crucial – in the good times and the bad".

"Even in a stagnant labour market, key talent can find opportunities to move onward, so reward professionals shouldn’t be too complacent while they wait for the economy to eventually pick up," Mr Cotton remarked.

The biggest concern remained employees' not appreciating the value of the total reward offering. This was closely followed by the fear that employees were not engaged by rewards.

The CIPD's Reward Risk survey revealed that attraction and retention of key employees had fallen out of the top ten list of concerns for the first time since the survey began in 2010, while increasing pensions costs entered the top ten for the first time.

Employee attraction and retention has been falling in importance over the last two years, falling from 1st and 6th places in 2010 to 9th and 10th places in 2011 and 11th and 12th in 2012 respectively. Other 'reward risks' that have moved up the table of concerns in the past year include:


  • Employees do not understand performance and behaviour requirements (from sixth to fourth);

  • Incentives not being motivating (from eighth to fifth);

  • Inability to communicate desired performance and behaviours (from eleventh to seventh)

  • Increasing pensions costs (from thirteenth to tenth).


Cotton said that with the introduction of auto-enrolment it was not surprising the cost of pensions was a growing concern.

"What is surprising, however, is that the underperformance of pension funds is still not regarded as a major risk for many of our respondents," he said.

"Even defined contribution plan sponsors should review the performance of the funds, especially their defaults, if they and their employees are going to derive a good outcome from this workplace benefit.

"Nevertheless, if the top risk among our respondents remains that 'employees do not appreciate the value of the total; reward offering', then HR needs to ask what it is doing to manage this concern"



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