In Brown Thomas, a young woman chooses a Prada handbag and pays for it in an unusual way. Instead of using cash, laser or credit cards at the till, she hands over a new form of currency given to her by her employer as a reward for her performance. Bonusbonds - which look, feel and almost smell like cash - are now being used by 600 companies in the Republic as a way of attracting top staff, getting the best out of them and - most importantly - keeping them. Tax-free for the employee, Bonusbonds is a way of providing material rewards outside the payroll system, yet it's totally tax compliant.
"We facilitate our clients to enter into an arrangement with the Revenue Commissioners which enables employers to pay benefit-in-kind tax on behalf of their employees," says Roger Kilner, managing director of Grass Roots Group Ireland (part of Grass Roots Groups UK PLC) which operates the scheme. This makes Bonusbonds more attractive than cash, since conventional cash bonuses may be subject to the highest tax rates for employees.
Accepted by 1,200 retail outlets, from furniture stores to travel agents, Bonusbonds offer choice and flexibility. As Kilner puts it: "Everybody has their own hot buttons".
In Limerick, an IT wizard with a sideline in farming used another Grass Roots Group scheme called Awardbank to buy 12 Friesian heifers. Awardbank - a banking system where awards are converted to award points - is administrated on behalf of companies by Grass Roots, which loads points into individuals' award bank accounts. Employees use the accounts to purchase goods and services of their choice.
Grass Roots charges the client company a straight fee linked directly to the value of the awards going through the system. "If people are not achieving and getting awards, then the client is not paying us for doing nothing," says Kilner. There's nothing new about rewarding employees for work well done: "Incentives have been around since Eve offered the apple to Adam," says Kilner. "But today it's about more than money. Employers need to make heroes of their employees."
The old-fashioned guarantees of a job for life, paid holidays and a pension are no longer big enough draws in an employees' market, where head-hunting is so aggressive that an employee in financial services or IT can be working for one company on a Tuesday morning, negotiate better terms with a new employer over lunch-break and start Wednesday working for the new company. One financial services company is so highly regarded that its staff receive invitations from head-hunters on a daily basis. "They require no CVs, nothing. As long as you work for that particular financial services company and you are breathing, you can walk into a job today," says one recruitment insider.
Salaries in the financial services and information technology areas have risen by 30 to 50 per cent in the past 18 months, largely due to aggressive attempts at poaching. "Employed people are getting offers from other companies. When they go back to hand in their resignations, their original companies are matching and beating the offers," says Helen Roberts of Centre Point Recruitment. "Companies are asking, `how do we attract people to work for us, to work harder, smarter, faster, and to stay with us?' Employers are now appreciating the relevance of motivating employees as a valid management tool," says Kilner. Backed by hard management psychology and research, the ethos of Grass Roots has its roots in US management guru Abraham Maslow's theory of a "hierarchy of need".
On one level, people work to make money and satisfy basic survival needs, but in an economy where employers have to "sell" themselves to potential employees - rather than the other way around - certain secondary needs take centre stage. Maslow ranks human needs in order of importance as: physiological; security and safety; love and feelings of belonging; competence, prestige and esteem; self-fulfilment; and, finally, curiosity and the need to understand.
This last motivation is why one 30-something IT professional recently gave up a 50k job in one firm to take a 30k job in another. This ambitious, young client, says Barry Murphy of Pyramid Recruitment (a specialist in IT recruitment), was willing to sacrifice income for training in certain highly sophisticated Internet technologies because he knew that, once he understood them, he would be back on 50k and more within a year.
Motivation can be far more basic: at Intel, says Murphy, a BMW 300-series sits in the car-park as an enticement to employees to bring their friends to work for the company. Introduce a friend who is subsequently employed, and you enter a monthly draw for the car. For people in their 20s, the BMW is a very attractive inducement.
Feelings of belonging and esteem are also being offered as inducements by employers. The latest recruitment ads for IT companies carry the core message: "We're nice people to work for and we'll appreciate you."
Motivating workers - as avaricious as it may appear - isn't just about "handing out fluffy ducks", says Kilner: "Money and `goodies' won't overcome fundamental weaknesses in your business structure.
"Many companies are flocking to us now as a knee-jerk tactical response to immediate needs created by the fact that they cannot find or keep employees," says Kilner. He would prefer to see companies accepting that motivational management should be intrinsic to the way a business operates: "Over the next year, we want to help companies develop a more strategic view, to build motivational systems into the culture and ethos of the business."
The Business 2010 report, published last year, warned that small and medium-sized companies will have to boost productivity of employees in order to survive. There were 54,000 vacancies in the private sector last year, according to the Economic and Social Research Institute's latest research. The ESRI's Prof Gerry Hughes predicts that employers will find ever more imaginative ways of attracting staff. In the battle for the best and brightest, companies frequently deploy alluring tactics. Signing-on fees, stock options, bonuses for staff who bring in friends to work for the company and company shares are all on the table, yet less tangible, quality-of-life issues are proving to be more important to workers than financial gain. "Quality of life has been shot to bits in a short space of time. With two partners working and commuting, offers of flexitime and additional holidays may be more important to parents than an extra £2,000 bonus, which is less than £1,000 after tax," says one recruitment agency executive. "Companies in investment banking now are offering individualised benefits packages - including rental allowances - as a way of offering something over and above salary. It gives the employee a feeling of being appreciated and looked after," says Roberts. Many companies today want to recruit loyal permanent staff rather than contract employees, because too often contract employees walk away after six months with a raft of skills acquired at the expense of the company, says Murphy. Firms want staff who are capable of long-term commitment to the company, but in a competitive, contract-based culture, these people can be hard to find.
Companies are enticing permanent staff by offering family-friendly cultures, flexitime, job sharing, training, solid career paths, health plans and that intangible feeling that employees are at the heart of the company. Working from home and telecommuting, middle-level IT developers can earn up to 45k, and this has started a trend for a return to rural life by urbanites fed up with traffic and high house prices, says Murphy. "We are getting lots of calls from people who want to go back home to rural Ireland to work. Even multi-nationals like the Deutsche Bank and Bank of Ireland have moved to Kilkenny, while PSPC fund administrators are opening an office in Wexford," says Helen Roberts, who has recently set up recruitment offices in Cork and Belfast.
Centre Point: 01-2409404 (Dublin); 021-4861416 (Cork); 048-90517002 (Belfast); www.centrepointgroup.com
Pyramid Recruitment: 01-8025178; www.pyramidconsult.ie
Grass Roots Group: 012302707; info@grg.ie
