MOTIVATING “SURVIVING” EMPLOYEES WITH BENEFITS AFTER RETRENCHMENT
They may experience feelings of powerlessness and, subconsciously, being betrayed by the organisation to which they offered their allegiance.
These emotions can be exasperated by the confusion caused by changes in management, differing responsibilities and increased workload, merging with other teams, and other events associated with downsizing.
Commitment and performance
The result is that they experience higher levels of stress that foster a negative attitude towards organisational commitment and reduce job performance.
So how can employers break this pattern and motivate their workforce to become productive again? In a 2004 a study titled Perceived Control as an Antidote to the Negative Effects of Layoffs on Survivors’ Organizational Commitment and Job Performance, researchers from several US universities measured the effects of perceived control on workers one month after downsizing had taken place at a selected company.
The paper reports that remaining employees were more negative when retrenchments were thought to have been handled unfairly, trust in management was low, survivors were emotionally close to those retrenched, and the threat of future layoffs was relatively high.
However, in all cases, if staff felt they had some form of control over their circumstances, they were less haunted by perceived threats to their wellbeing and were better able to resume working normally.
It follows that employers must find ways to provide that sense of control. With their budgets being constrained, an ideal option is to offer workers more say over how they are remunerated.
Flexible benefits is a remuneration model that allows employees to restructure their contributions to benefits on a sliding scale. This means they can decide what percentage of their pay to allocate to compulsory employer provided benefits in general and how much to reserve as cash for their living expenses.
Under post-retrenchment circumstances, the scheme empowers employees to take control of something important to them in the midst of a situation over which they may have little say.
Employees whose lifestyle needs change over time or even suddenly, are now equipped to deal with their circumstances as they see fit.
For example, a CEO whose wife was retrenched, was able to continue paying his bond by temporarily reducing all compulsory benefit contributions to a minimum amount and taking the bulk of his salary in cash.
A single person may want more cash for entertainment; a newly wed couple may want more money for a home; nursing mothers typically need better medical aid for their babies; those suddenly afflicted by a chronic illness will increase their healthcare benefits and dread disease insurance cover; and people nearing retirement might increase their pension contributions. Flexible benefits can be mixed and matched accordingly to each employee’s personal and financial requirements.
The types of benefits an employer offers is also important. An educational bursary scheme, for instance, allows workers to receive the tax on these fees as income, by reducing their taxable income which in effect increases their monthly net take home pay.
Employers should keep abreast of benefits that can legally be structured into their salary package which would assist their staff to gain more from their pay. In addition, the fact that an employer offers flexible benefits, also makes employees feel valued.
Statement of benefits
What about those employers who already provide flexible benefits? They can still promote the notion of control by emphasising how employees can take command of their lifestyle needs by properly utilising their flexible benefits which would directly impact their take-home pay.
For instance, at Tax Consulting South Africa, we compile a customisable benefits statement for each employee in our clients’ enterprises at a predefined interval, for example, every quarter.
The statement is a powerful tool for highlighting each worker’s earning profile and benefits contributions. Surprisingly, employees often aren’t even aware of the benefits they receive or how to manage them effectively.
So the statement can create the opportunity for employers to start a discussion around the value employees receive in return for their work and how to leverage it to their advantage.
Again, the effect is that the employees will gain a sense that there is something they have control over and can focus on in circumstances they still consider difficult or threatening.
Employees can also receive training from a remuneration specialist on understanding flexible benefits and the direct impact on their package. A financial services provider will also be able to provide guidance on optimizing the the ideal mix of employer provided benefits for their current lifestyle needs.
That their employer took such interest in their wellbeing signals that they are valued by their organisation.
In the aftermath of retrenchments, employers with limited budgets must help stressed workers reignite their commitment and productivity.
They can start by offering flexible benefits to give staff a sense of control and emphasise this control by regularly issuing benefits statements or providing training on benefits management.
Remuneration and Tax Specialist