Investment in training and development set to grow in 2008

Investment in training and career development is set to grow in 2008 as companies devote more resources to non-pay related strategies to keep their staff motivated and engaged, according to findings from Mercer's 2007 European Total Rewards Survey. Sixty three percent of respondents intend to keep investment in base salary steady, while 8 percent would actually reduce it. Respondents also noted that attracting and retaining employees will remain the most significant rewards challenge facing businesses.

Mercer's European Total Rewards Survey which covered 200 multinationals, provides an insight into the rewards practices, objectives and challenges facing European organisations. 'Total Rewards' is ideally defined broadly as compensation, benefits and careers which, combined, drive employee engagement and motivation. Total rewards includes, and is not limited to, training opportunities, career development programmes, short and long term incentives, non-cash recognition, work/life programmes, healthcare benefits, retirement benefits and base salary increases.

According to Paul O'Malley, principal at Mercer, "In general, companies in Western Europe are looking at increasing choice in rewards as a way of differentiating themselves from competitors. Investing further in training and career development is one such tactic in talent management strategies. It is a positive trend and should help increase employee engagement and satisfaction."

The survey covered total rewards themes such as employee engagement, staff retention, sustainability, investment and costs.

Engagement and retention

For employers, retaining high performers was considered a very important challenge over the next 12 months by 85 percent of respondents. Attracting the right talent was ranked very important by 80 percent. Engaging employees was ranked very important for 62 percent and 63 percent felt that aligning total rewards with business strategy was very important.

When asked how effective their company's total rewards strategy was in ensuring employee satisfaction, just 18 percent considered it to be very effective and 72 percent said it was somewhat effective.

Paul O'Malley commented, "As employee motivation and engagement decreases, so does productivity. This underpins respondents' current view of the importance of retaining and engaging staff. Companies must decide which total rewards strategy best fits with their business. It should achieve a balance between the needs of all stakeholders – employees, employer and shareholders."

Investment and sustainability

The level of investment in total rewards is considered to be financially sustainable over the next three years by 78 percent. Respondents in Western Europe (81 percent) reported higher levels of sustainability than those in Eastern Europe (63 percent)

Paul O'Malley said, "This is mainly due to the rapid increase in base salaries in Eastern European countries where many companies established operations to capitalise on lower employment costs. In general, the introduction of long-term incentive plans is also seen as adding cost. Companies that believe their total rewards costs are unsustainable should develop a plan of action to rectify the position. "

Only 24 percent of respondents consider retirement benefit costs to be unsustainable over the next 3 years. This could be attributed to the fact that defined benefit plans are now common to only a small number of countries. However, most correspondents felt that uncertainty over funding of retirement benefits is an on-going issue.

63 percent of respondents intend to keep investment in base