We work in a market where candidates have the upper hand.
Transport and Infrastructure investment is increasing, and unfortunately, the talent pool remains as tight as ever. The skills shortage means that, companies have to build a strong case to entice the best talent into their senior management roles.
While culture and values, career progression and good leadership will cultivate employee satisfaction and encourage company loyalty; salary, benefits and perks have to be right to recruit top talent. More than a third of employees admit perks and benefits are amongst their top consideration before accepting a new job*.
We would never recommend a candidate for a role whose sole motivation is money, but the package has to be right to secure them. The latest report from the Office of National Statistics shows that salaries are rising on average 2.4% per year** which is broadly in line with the 2.5%-3% annual increases we have noticed in the transport and infrastructure sectors, with top performers receiving 5%+. Loyalty and performance should be recognised and reflected in remuneration.
A solid benefits package can often be more appealing than the base salary alone and will promote employee engagement while providing a sense of security and aligned objectives. This reduces the risk of competitors luring away your leadership team with inflated base salaries.
What are good employers offering to attract and retain staff?
1. An Uplift in Salary
Annual pay rises for your staff are the most basic form of recognition and are fundamental to retaining employees and keeping them invested and motivated in the company.
But in order to get them through the door in the first place, you need to put forward an attractive offer. From our experience, it takes an average total compensation increase of 17% for a Director to move jobs.
It is rare that we work with a client on a role that doesn’t offer an annual bonus. Whether it’s balanced score card based or discretionary, nine times out of ten companies will have a bonus scheme in place.
Bonuses motivate and retain top performers and are a major factor when putting together a salary package. You can offer a base salary that competes with their current package, but if they are receiving a 30% bonus on top, where you are only offering 10%, then your offer needs to compensate with a higher salary.
We have found that the average bonus offered to employees across the transport and infrastructure sector is 21%.
Unsurprisingly, bonuses vary significantly between different types of company. Research from our database suggests that asset owners, for instance, offer higher bonuses than most, with the average maximum bonus being 35%.
Average Bonus by Company Type
|Average Potential Bonus|
Public Sector/ Not for Profit
3. Long Term Incentive Plans
Typically only available for more senior staff, an LTIP works on the basis that if an Executive or Director meets certain key business or performance targets over a set number of years, they receive an incentive – usually in the form of an additional bonus or shares in the company.
It has been recently proposed by MP’s that LTIP’s should be scrapped as they over complicate pay outs, saying that “pay must be reformed and simplified”***. And while the odd company will take advantage of schemes, such as the likes of BP who came under fire for awarding its Chief Executive £14m during a massive share price slump; for the most part, LTIP’s encourage employees to support and invest in the long term goals of the company.
4. Flexible Car Schemes
The majority of senior directors will receive either a company car or a specified car allowance. But the ability to choose between either option is actually a useful perk for many candidates.
For instance, for a Director who commutes into London by train five days week, a company car is of little financial advantage. However, a car allowance paid as cash would cover the cost of their travel.
Situations will differ greatly between individuals and so simply having the choice is preferred. 30% of candidates receive a company car (typically those working for contractors) and of those who receive a car allowance, on average they receive £7,000 per annum.
5. Flexible Benefits
Similarly to flexible car schemes, every employee will value different benefits individually. Flexible benefits are a relatively new trend in the UK, but are gaining traction quickly. An employee is given a flexible benefits allowance, of say £6,000, and can then choose to pick benefits they value from a list or take it as cash. Personalising benefits addresses the diverse needs of your employees. For example, some prefer a good pension and some prefer a bigger holiday allowance.
The benefits pot on offer can include; increased pension contributions, increased holidays, private healthcare, childcare vouchers, gym membership etc.
Final salary pensions are more common in the transport and infrastructure sectors than many other industries as some companies having previously been in public ownership. Final salary schemes still act as a significant factor in a low churn of staff amongst long term employees at certain companies.
Final salary pensions are gradually being phased out and will be rare in ten years’ time, even now only 10% of candidates we have placed are on such schemes.
If you offer a defined contribution pension and are looking to entice a candidate with a final salary scheme, expect to have to pay an additional 10-12% in salary to make up the shortfall.
Your companies approach to benefits and perks will significantly affect your chances of attracting and retaining the best talent in the transport and infrastructure sectors. If you are looking at making senior hires then click HERE to see how we can help with salary and benchmarking advice.