By: Perry D. Wiggins.
In times of economic downturn, it is incumbent on every finance leader to take a hard look at spending and make cuts as needed to keep the business strong. While every cost should be on the table, this month I’m going to advocate a move that may seem counterintuitive.
If you have the finances to do so, you should leave your employee reward and retention spending intact and make investments in keeping morale high. Not every company will be in a position to do this, but for those that can, it can make all the difference for struggling employees.
This month’s metric, the total cost to reward and retain employees, includes expenses related not only to compensation, benefits, and payroll processing, but also award/incentive administration and employee assistance. Any expenses that a company incurs by hosting morale-boosting engagement activities or by gifting its employees — whether with financial assistance for childcare, employee wellness programs, or a gift card to recognize good performance — is part of this measure.
Through our Reward and Retain Employees Performance Assessment, APQC found that companies in the 75th percentile spend the most on this process at $0.53 per $1,000 revenue. Companies within the median spend $0.33 per $1,000 revenue, while those in the 25th percentile spend $0.17 or less.
Source: CFO (2020)