Poor comms costing firms £470k in staff turnover and absence

Poor communication of benefits is costing the average business £470,000 a year in increased staff turnover and absence, according to research from Cass Business School.


The research, carried out for Unum, indicates that failing to tell staff about available benefits such as private health insurance and income protection is costing UK companies £2.7bn every year. The report, Money Talks: Communicating Employee Benefits, shows companies that have invested in good employee benefits but haven’t told staff what they are entitled to are no better off than if they had not provided the benefits in the first place.

It says around £1.5bn a year is lost through the cost of replacing a member of staff, which equates to a year’s salary due to recruitment and training costs, combined with lost productivity. A further £1.2bn is lost through higher workplace absence costs, it argues.

The research reveals that 64 per cent per cent of businesses have invested in good employee benefits but don’t tell staff what they are entitled to.

The research calculates that a typical organisation with 1,000 employees that offers good benefits but fails to communicate them spends £470,000 a year more on staff turnover and sickness absence than those companies that have comparable benefits packages, but have good communications practices.

The research uses data from the UK Government’s 2011 Workplace Employment Relations Survey (WERS), the most authoritative source of information on employment relations in Britain, and includes data collected from both employers and employees from 2,680 workplaces. It demonstrates a gap in understanding between what employee benefits an employer provides, and what their employee thinks is available.

The report says lack of awareness of benefits prevails at all levels of businesses.

Cass Business School’s Professor Nick Bacon says: “With the cost of living rising more quickly than many peoples’ income, and employers struggling for growth, staff retention is a vital issue. When organisations can’t easily increase salaries, they need to identify other ways to build staff loyalty – and a good benefits package does this. However, our research shows that even if companies are offering good benefits, if they fail to tell staff what’s available, it’s no better than not offering these benefits at all.”

Unum CEO Peter O’Donnell says: “Money Talks shows that simply offering a great employee benefits package isn’t enough to promote wellbeing and financial security amongst employees.

“Our experience shows that contrary to employers’ beliefs, communicating with staff about financial protection and well-being initiatives such as income protection and private medical insurance, leads to lower absence rates and reduced time off sick. Having an open dialogue between employers and employees about benefits builds a more productive and loyal workforce, and the bottom line benefits are evident.”

The report identifies types of workplaces that are more likely to offer a wide range of benefits, but rank low in terms of communications:

• UK or EU-owned organisations. US-owned workplaces tend to be far better at communicating with staff about benefits

• Smaller organisations (with fewer than 50 employees)

• Non-union workplaces

• Companies in the manufacturing; electricity, gas, steam and air conditioning supply; water supply, sewerage and waste management and remediation services; construction; wholesale and retail trade, repair of motorcycles and motor vehicles; transportation and storage; information and communication; and financial and insurance activities