Kelly Report Non Salary Benefits


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In a world where the search for key talent is as tough as ever, there is renewed focus on the types of benefits and
performance incentives that both attract and retain employees. What emerges from the latest study of these non-salary
benefits is that there is a clear pattern of preference for certain benefits – particularly those that have a longer-term
focus, including areas such as health and training.

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Kelly Report Non Salary Benefits

  1. 1. A Kelly Services® Report Benefits and Perks — The Nature of Non-salary Benefits and their Impact on Employment and Career Choice A European Perspective 2010 Kelly Global Workforce Index
  2. 2. 1 I 2010 Kelly Global Workforce Index I Europe Introduction: In a world where the search for key talent is as tough as ever, there is renewed focus on the types of benefits and performance incentives that both attract and retain employees. What emerges from the latest study of these non-salary benefits is that there is a clear pattern of preference for certain benefits – particularly those that have a longer-term focus, including areas such as health and training. The Kelly Global Workforce Index (KGWI) examined the views of 60,000 people from 16 countries across Europe to establish what employees themselves regard as the most important workplace perks and benefits. Survey respondents ranged in age from 18 to 65 and comprised the three generational groups: Generation Y (age 18 – 29), Generation X (age 30 – 47), and the baby boomer generation (age 48 – 65). Respondents were either employed within a variety of industries, ranging from Information Technology to Finance, or were unemployed and searching for future work opportunities. The findings were as follows: • Other than salary, the benefit that is rated as most important to employees is training, followed by flexible hours, health benefits, vacation or personal time-off, retirement benefits, a motor vehicle or motor vehicle allowance, telecommuting options, and life insurance. • 39 percent of respondents report that some of their compensation is variable as a result of being tied to individual, group, or company performance targets. • Of those whose remuneration is not variable, 37 percent believe they would be more productive if it were. • 56 percent say that profit sharing or employee ownership options would motivate them to perform at a higher level. • In regard to employer-provided health benefits, 45 percent of respondents rate them as “very important” and 46 percent as “somewhat important.” • 78 percent believe that employers should take some responsibility for employee health and wellbeing as part of their overall employment package. • 51 percent say that employers should provide an incentive or reward to employees for adopting a healthier lifestyle by quitting smoking, losing weight, or taking up exercise. • The employer-provided health benefit that rated as most important is health insurance, followed by gym access or discounts, on-site health screenings, a smoke-free environment, and corporate exercise programs.
  3. 3. 2 I 2010 Kelly Global Workforce Index I Europe Fringe benefits The use of non-salary benefits has exploded across the globe as a means of attracting key people. Most large- and medi- um-sized employers will offer a remuneration package that includes salary as well as a suite of other benefits. These can include laptops, health benefits, motor vehicles, travel allow- ance, training opportunities, arrangements to take time off work, or flexible working options. The range of benefits that are offered has evolved to take into account a more flexible and mobile working environment, as well as lifestyle considerations that may revolve around more family-friendly work arrangements. For many workers, the availability of these fringe benefits has also become a useful way to maximise their rewards by avoid- ing higher personal income tax rates. From an employer’s perspective, there is an interest in ensuring that their benefits meet the real needs of the employee, while serving as a means of attracting and retaining top talent. What emerges from the latest research by Kelly Services is that there is a definite pattern to the type of non-salary benefits that appeal to workers. Moreover, there are generational differ- ences that show how attraction to certain benefits change over the course of a person’s career. What is perhaps most surprising is that of the most common non-salary benefits offered, employees overwhelming prefer training. Irrespective of age, training is the most preferred non-salary benefit, selected by 44 percent of respondents, well ahead of the next most popular option, flexible hours (17 percent). This is followed by health benefits (11 percent), vacation or person- al time off (9 percent), retirement benefits (8 percent), a motor vehicle or motor vehicle allowance (7 percent), telecommuting options (3 percent), and life insurance (1 percent). Employee preference for non-salary benefits The range of non-salary benefits has expanded dramatically, and they have become a key means of attracting talent. What emerges from the latest research is that the form in which these benefits are offered is important if they are to have value and contribute to workplace productivity. While training is the preferred benefit among all age groups, it is particularly significant for Gen Y – the group with the bulk of their working life ahead of them and the ones who stand to gain the most from upgrading their skills. Even Baby Boomers, who are in the later stages of their careers, still prefer training to all other benefits and perks. For this group, retirement benefits rank as second most important.
  4. 4. 3 I 2010 Kelly Global Workforce Index I Europe Profit sharing and performance pay In an effort to better align company goals and employee performance, many organisations are turning to various forms of profit sharing. It also appears that after some initial reluctance, employees are embracing performance-based rewards. Performance-based earnings There is generally broad acceptance of employees having a greater stake in the businesses that employ them. Already, a considerable proportion of employees are in an ar- rangement where some of their pay is variable and dependent on performance outcomes. Performance-based pay includes any arrangement where an element of the total remuneration package is tied to meeting performance targets and may include profit sharing, perform- ance bonuses, or sales commissions. Typically, employees receive a performance payment after they achieve certain targets, which may be part of the employment contract. The survey undertaken by Kelly Services shows that 39 percent of respondents have their pay tied to individual, group, or company-wide performance targets. The incidence of performance-based pay is slightly higher among Gen X (41 percent) and Gen Y (38 percent) than it is for Baby Boomers (34 percent). Many younger workers have been introduced to performance-based remuneration in some form and appear to be relaxed about it. Across Europe, there is reasonably wide variation in the rates of performance-based remuneration, with levels above 40 per- cent in Russia, Poland, Portugal, Hungary, and Germany. The lowest rates are in France, Denmark, and Netherlands. Linking remuneration more closely to performance clearly has the capacity to lift employee productivity and produce greater rewards for those who work efficiently and productively. The advantage of performance-based pay is that it can be a win-win situation. The employer can attract a more productive workforce, while employees can boost their take-home pay through good performance. Of course, there is also a downside; remuneration can fall if individual, team, or organisational performance drops. There is also strong support for performance-based pay among those who are not currently receiving it. When those not on variable pay arrangements were asked about it, 37 per- cent responded positively, with the most enthusiastic support among younger (Gen Y and Gen X) workers.
  5. 5. 4 I 2010 Kelly Global Workforce Index I Europe However, many younger workers appear quite confident in their ability to perform at high levels. A further refinement of the performance-based arrangement encompasses the notion of profit sharing or employee owner- ship – giving employees a direct stake in the businesses that employ them. When asked about profit sharing or employee ownership, well over half of respondents say they believe they would be more productive on such an arrangement. Larger organisations have generally been more active in developing performance pay arrangements for their staff. But, increasing numbers of small and medium firms are seeing the benefits of such an arrangement. With employees demonstrating their support for such arrange- ments, it is possible that more firms will explore ways of giving employees a greater stake in business ownership. Similar to the findings on the question of performance-based pay, the results on ownership and profit sharing reveal a higher rate of approval amongst younger workers. The most recent economic recession has probably played some part in helping to fashion views about corporate per- formance and employee rewards. Many who lost their jobs in the economic downturn, or who saw colleagues made redun- dant, understand the link between corporate performance and job security. Increasingly, employees at all levels understand that job secu- rity and prosperity rely on profitable, stable organisations. Em- ployees who have been through the economic turmoil realise that the link between company performance and employment exists regardless of whether it’s detailed in an employment contract. For that reason, they are likely more relaxed about it being formalised as part of their contracts. What is interesting, is the range of views about profit sharing and employee ownership that prevail across Europe. Profit sharing and employee ownership received very high levels of support in Poland, Hungary, Russia, and Germany, but received low levels in Denmark, Portugal, Netherlands, and the U.K.
  6. 6. 5 I 2010 Kelly Global Workforce Index I Europe Employee health rises to the surface As the divide between work and social life becomes blurred, the issue of workplace health is taking on greater significance. Many employees and employers see personal health and wellbeing as issues that fall under the responsibility of management. Health and wellbeing The issue of employee health is growing in importance to em- ployees and employers. For many workers, health benefits represent a major work- related benefit. Driven by the escalating costs of health care, a rising focus on preventative health, and longer hours spent in the workplace, many employees see health and the workplace as intertwined. Approximately half of those surveyed say that employers should provide incentives or rewards for employees who adopt a healthier lifestyle – by quitting smoking, losing weight, or taking up exercise. The notion of businesses taking on the responsibility (and cost) of enhancing the health of their workforce won’t be to the lik- ing of a lot of employers. But, there are others who may recognise the link between good health and improved performance. A workplace where employees are encouraged to maintain and develop healthy lifestyles is one that is likely to have lower absenteeism, better morale, and improved productivity. It’s not simply that healthier employees take less time off work; they are likely to be more energetic and productive while they are at work. In a climate where work is becoming more mobile and where people are engaged in work-related activities after normal hours, the health debate becomes more relevant. Some 45 percent of respondents affirm that employer-provid- ed health benefits are “very important” while 46 percent say they are “somewhat important.” Gen Y place higher importance on these benefits than their older colleagues do. While they are arguably in better health as a whole than their older counterparts are, they can clearly see the benefits of investing in their health for the long-term. There is strong support for employers taking some responsibil- ity for employee health and wellbeing. More than three-quar- ters (78 percent) of those surveyed believe that health initia- tives should be part of their employment package. Indeed, there is even support for employers to go further and take steps to encourage good health through a system of re- wards or incentives to those who actively improve their health.
  7. 7. 6 I 2010 Kelly Global Workforce Index I Europe Health insurance is the key benefit across all age generations, although slightly more favoured by Gen X than Baby Boomers or Gen Y. There is really only one other employer-provided health benefit of significance to employees – gym access or discounts, fa- voured by 21 percent of respondents, and much more popular with Gen Y than their older colleagues. Other health benefits such as on-site health screenings, a smoke-free environment, and corporate exercise programs rate relatively low for most workers. However, on-site health screen- ings and a smoke-free environment are a little more popular with Baby Boomers. Increasingly an employer of choice will be seen as one who embraces wider elements of employee work and lifestyle in- cluding taking an active interest in employee health. But, what health-related benefits are most attractive to em- ployees? On this issue, there is overwhelming agreement – the health care benefit that is most important to employees is health insurance, cited by 59 percent of respondents.
  8. 8. 7 I 2010 Kelly Global Workforce Index I Europe About Kelly Services Kelly Services, Inc. (NASDAQ: KELYA, KELYB) is a leader in providing workforce solutions. Kelly offers a comprehensive array of outsourcing and consulting services as well as world-class staffing on a temporary, temp-to-hire and permanent placement basis. Serving clients around the globe, Kelly provides employment to 480,000 employees annually. Revenue in 2009 was $4.3 billion. For more information about the KGWI findings, please visit or contact the EMEA Marketing Department by e-mail ( or by phone (+41 32 737 1800). Conclusion There was once a time when employee benefits were largely a means to avoid high taxation rates on salary. Motor vehicles, lap- tops, and other non-cash benefits were the favoured means of avoiding income taxes, but this is changing. Employees are now prepared to forego some of these material rewards in favour of benefits that will sustain them over the life of their career. There is a varied range of benefits that employers utilise in addition to salary and which provide an incentive to attract and retain the best quality employees. More recently, employers are looking at how these benefits align with corporate goals, while employees are looking at which benefits are most valuable to their circumstances. For the employer, there is a new focus on the role of perform- ance-based incentives as a way of directly motivating employ- ees and ensuring they meet performance targets. Perhaps most surprising is the way that employees are embrac- ing this form of rewards despite their inherent uncertainty. Employees are also increasingly aware that many of the bene- fits that are regularly provided to them may fulfil some immedi- ate need, but are not necessarily providing long-term value. It is most revealing that the favoured benefit amongst all employees is training. This may not be as enticing as a mo- tor vehicle, but it is probably going to be of more long-term benefit, especially for younger workers who have their career ahead of them. Equally important is the provision of health-related benefits, which meet a growing desire for preventative health strategies that will enhance quality of life and provide benefits for years to come.