As COVID-19 continues to impact the economy, organisations are asking how they can structure employee remuneration packages optimally and more tax efficiently.
Below are six elements they need to consider if they want to provide their staff with greater real than perceived value.
1. Don’t mismatch models
Several factors determine how employers can structure their reward packages and they must respect their constraints. These include company size, industry, type, budget and the age of the business.
A startup, for example, cannot afford the same rewards as a mature organisation and should not try to emulate one.
2. Review employee demographics
It’s critical that a company understands what its employees’ value as this can help it develop packages appropriate to their lifestyle demands. Millennial employee needs differ greatly to more mature workers with families or senior executives.
Different groups have very different priorities so a company must understand the biography of its workforce.
3. Reassess benefit offering
Benefits are only effective rewards if employees value them. So it is important that organisations regularly review their mix of benefits to ensure they align with best market practice and remain popular with staff.
Standard benefits, like medical and life insurance, may be extended with trauma or dread disease cover, for example, as long as employees see them as necessary. Unwanted benefits are simply money down the drain.
4. Offer fair allowances
It is not good practice for employees to fund business expenditure at the best of times. So companies need to ensure they offer allowances to cover these types of costs. Staff should be fairly compensated for use of their private vehicle and fuel for business travel, cell phone expenses, and other working costs that, in the current economy, can put them at a financial disadvantage.
Even if those costs seem trivial to the employer, they could tarnish an otherwise attractive package.
5. Promote good package perception
A well-structured package strikes the right balance between employer contributions and employee deductions, as well as benefits versus cash. How it appears and is described on paper can be the difference between a disgruntled employee and a motivated one.
Forward thinking companies often issue employees with a regular Total Reward Statement so they can see all their benefits together.
6. Educate employees on benefits
Employees often don’t understand how their packages are structured, what their benefits offer and how their tax is calculated. Employers can make sure they do by providing training on the personal value they derive from the way their package is designed.
If they make it part of their HR onboarding process, they can get their new recruits up to speed on their rewards and motivate them from day one.
Because of current trends, employers should review their remuneration packages to ensure they are structured optimally, are tax efficient and are competitive in today’s job market.
They can also engage a reputable reward specialist who will provide invaluable guidance.
Tanya Tosen is a Tax and Remuneration Specialist at Remuneration Consultants.