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17/12/04

IT Staff to Receive Bonus Pay-Outs in 2005

2005 is set to be a year of growth for the IT sector according to research published in the Intellect Employee Benefits Benchmarking Survey 2004 carried out in conjunction with thomsons online benefits.

The main findings pointing towards this conclusion include:

• Bonuses – a massive 77% of companies intend to pay a staff bonus in 2004. Of those companies paying a bonus, nearly three quarters (72%) will pay one for Company Performance closely followed by Individual Performance (61%)
  
• An active job market - on the list of challenges HR will face in 2005, retention ranks second (42%) and recruitment ranks third (36%) highest
  
• Redundancy - encouragingly redundancy is given the lowest priority (8%) as an HR challenge for 2005. This finding is backed up by the fact that 68% of respondents expect their company to be actively recruiting over the next twelve months

However, the combination of a low inflation but profitable business environment means that employers must work smarter to leverage more value from their spend on employee benefits. With the majority of respondents (60%) planning to offer a pay rise in 2005 in line with inflation, and the main HR challenge being faced maintaining/improving morale (43%), employers need to consider the pivotal role that employee benefits can play in retention, recruitment and motivation.

The signs are that employers in the IT sector are doing this with around three quarters of companies (73%) stating that they had reviewed their employee benefits strategy within the last 12 months. Almost half of respondents (48%) who had reviewed their benefits strategy did so because of retention issues with their employees, and a third (37%) doing so because they believed they could leverage better value for their spend.

The Intellect Employee Benefits Benchmarking Survey 2004 with a sample of c100 companies offers an in-depth guide to the type and levels of benefits offered throughout the IT sector including share schemes, overtime, company cars. The survey covered companies throughout the sector including IT services and software, telecommunications, and electronics.

Across the IT sector the most commonly offered core benefits were life cover (60%), private medical insurance (44%), pensions (43%) and permanent health insurance (39%). The most commonly offered flexible benefits were pensions (18.7%), additional holiday entitlement (16%), and private medical insurance (13%). The decline in the number of companies offering a defined benefit pension scheme was also evidenced with just 5% of respondents offering a final salary scheme.

Other key findings from the survey include:

• Just 8% of respondents had a flexible benefits scheme in place. This finding is in line with research carried out by thomsons online benefits which found that 5% of organisations (of all sectors) had such a plan in place
  
• Whilst 9% of respondents were currently considering implementing a flexible benefits scheme, 77.3% had a standard benefits scheme in place

There was also evidence of strong take up of flexible working practices in the IT sector with:

• 62% of respondents receiving requests for flexible working and 88% of those accepting them
  
• 67% of respondents offered all employees the chance to apply for flexible working rather than just those who met the legal requirements
  
• Almost 7 out of 10 companies (69%) offering employees both career breaks and sabbaticals

Charles Ward, Marketing & Services Director at Intellect comments: "It is very encouraging to see clear evidence throughout the survey of the general improvement in the market conditions in the IT sector. These findings concur with feedback we are receiving and therefore we look forward to 2005 being a profitable year for our members."

Chris Bruce, Marketing Director at thomsons online benefits adds: "The survey findings aptly demonstrate that in the current low inflation environment, employers must focus on the role that non-salary related benefits employee benefits can play in attracting, retaining and motivating their people."

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