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Training Before Raises, European Survey Shows

Oct 24, 2006
This article is part of a series called News & Trends.

Employees in Europe are more likely to receive training and development opportunities next year compared to 2006, with fewer large base-pay increases, according to a Mercer Human Resource Consulting survey of more than 430 companies.

To avoid raising their fixed costs, the organizations want to focus on training, non-cash rewards, and bonuses to top-performing employees.

Approximately 16% of respondents from mostly multinational European companies are planning to increase their investment in base salary rises next year, whereas 58% say they will spend more money on training and career development initiatives for their staff.

The survey notes that 32% of companies say they will invest money in annual cash bonuses, 44% report the use of non-cash rewards, 16% in retirement benefits, and 20% in healthcare benefits. ?

“By investing in employees’ careers, companies can build the capabilities to fill crucial skill gaps internally, rather than go through the costly exercise of hiring new people. From an employee’s perspective, training and development opportunities are often of as much interest as the contents of a pay packet, if not more so,” Paul O’Malley, principal at Mercer, explained in a news release.

Reward Challenges

The survey shows that 32% plan to develop the talents of existing employees to fill skills gaps, while 24% are relying on new hires. The remaining participants say they will use a combination of the two.

Further, the survey suggests that 83% of employers are most concerned about attracting and retaining talented employees over the next year. The second biggest challenge cited, at 65%, was rewarding high performers. Other worries noted among employers include implementing reward strategies that underpin business goals, at 64%, and ensuring pay is linked to performance, at 63%.

Avoiding the Aging Workforce

However, the survey suggests that adapting rewards to suit an aging workforce merits the ?lowest priority, at just 11%.

The survey results note that although organizations rely heavily on the skills that their older, experienced staff bring to the workplace, the rewards packages they offer do little to engage these employees.

This article is part of a series called News & Trends.
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