Salaries most important HR issue, employer survey finds

Almost half of employers (49%) say salaries are the most important "people issue" facing their company.

According to the Mercer/IRN Employee Rewards, Benefits and Engagement Survey 2011, 42% say employee motivation is the most significant issue facing their organisation this year.

More than three quarters of them (77%) are planning specific initiatives to address this.

"The economic environment has put extreme pressure on organisations to carefully manage and reduce costs," said Patrick Robertson, Principal at Mercer.

"This has compelled many organisations to reconsider their employment proposition and to implement changes to their reward strategy.

"For effective management of change an organisation’s reward strategy and employee expectations need to be aligned, both to ensure that change is supported and to minimise the negative impact on employee engagement.”

Respondents were also asked to rank the areas that they feel employee engagement most impacts. The top three factors for both employers and employee representatives were organisation financial performance, customer satisfaction and quality.

Employer and employee representative views on reward satisfaction differ greatly with 50% of employers feeling that their staff are satisfied with their benefits when in fact only 14% of employee representatives report this.

Similarly, 41% of employers believe their staff are satisfied with incentives compared to 14% of employee representatives.

In addition, 44% of employers believe their staff are happy with base pay compared to only 25% of employee representatives.

When asked to consider non-financial rewards the vast majority of employers rate their company as very good or good on the dimensions of job security (73%), employer brand (62%), physical work environment (57%) and overall organisational culture (55%).

For attracting new employees, employers rated the most important factors as base pay (64%), job security (63%) and career development (50%).

Employee representatives rated job security (77%) and base pay (73%) as being significantly more important than any other factor.

A total of 68% of organisations report that they plan to assess employee engagement levels in 2011 through an employee survey (83%), focus groups (37 percent), management interviews (23%) or other methods (4%).

The majority of organisations (77%) indicate that they are planning specific initiatives to address employment engagement levels in 2011.

"Clearly, the recent economic environment has negatively impacted employee engagement with salary freezes, restructuring and a decline in job security,” concluded Mr Robertson.

"This has significant implications for the organisational leadership who need to understand the views and opinions of staff and consider these as part of their future reward design."