Analysis: Do retailers do enough to protect their staff?

There’s a mismatch between what retailers value and what they protect, according to new research from Income Protection specialist Unum.

Retailers are more likely to insure printers and mobile phones than they are their staff, according to new research. The research, commissioned by Income Protection (IP) specialist Unum, reveals that more than half (54%) of companies in the retail sector have insurance for easily replaceable assets, such as printers. This is despite less than a third (29%) admitting they would be very or extremely concerned if these were to break.

Paradoxically, 91% of retail firms recognise that employees are one of their most important assets, and yet IP and benefits are offered by just 10% and 28% respectively.

“There’s a mismatch in what companies value versus what they protect,” says Peter O’Donnell, UK chief executive of Unum, which commissioned the September/October 2013 survey of senior executives, including 102 in retail.

“Our research was conducted in five sectors – accountancy, advertising, IT, law and retail. The retail sector was significantly more likely  than all four other sectors to not offer any employee benefits.”

So, why aren’t retailers offering staff IP or the benefits on offer elsewhere? Is the economic downturn to blame? What are  the business benefits of providing employee benefits to staff – and do they outweigh  the costs?

For example, when looking at the issue of sickness absence, about one in 10 employees will go on long-term sick leave during their working lives. For the ‘squeezed middle’ earning £25,000 to £50,000, income can fall  by up to half if they rely on state benefits when off work sick. In fact, more than one in four people fall into poverty within 12 months of going on long-term sick leave.

Temporary reasons

Unum estimates that penetration of IP in the retail sector is just 3%, with 4.2% of employees having cover. The fact more staff are employed on temporary contracts or on a part-time basis may explain the figures – especially when compared with other sectors assessed. O’Donnell says: “Even part-time workers will suffer if they can’t work.”

And this isn’t just something that employers have cut back on since the economic downturn – employees have been under-protected for some time, he says. “This goes back to before the recession. Many employers don’t understand what IP is, with only about half of Finance Directors and HR professionals fully understanding what it really covers.”

The economic climate may well have continued to put pressure on businesses –  and five years of it have made businesses cost conscious with an uncertain outlook making operating environments fragile. But retailers would do well to consider the costs of not providing adequate benefits packages to staff.

Sickness absence, for instance, costs on average £620,000 a year for a business with more than 500 employees, and 86% of retail businesses admit that long-term sickness absence is a concern for them. Indeed, IP is one of the few employee benefits that is also beneficial to employers.

Value and protection

In Unum’s survey, 26% of the retailers interviewed felt their benefits packages were only “adequate” (which could be interpreted as offering the bare minimum required by law, and not going above and beyond this to show staff they are valued) and also felt they could do more to protect their staff. A competitive employee benefits package, on the other hand, can provide a point of difference, helping to attract and retain the  best talent.

IP also helps to manage the costs of sickness absence for the employer and provides rehabilitation support to help people back to work when they are ready. But what are the costs and the impact on the bottom line?

Premiums will vary from company to company, says O’Donnell, pointing out that Unum has a varied range of solutions to fit individual employer budgets and circumstances. “Usually they cost around  £1 to £2 per day per employee,” he adds.

Given that long-term sickness can cost on average £620,000 a year and about £3,000 a year for smaller enterprises, it should be money well spent. In fact, for every £100  spent on IP premium, the employer receives £48 back, according to figures from the CEBR.

“Retail companies certainly need to do more to protect their most important asset,” O’Donnell concludes. “And that isn’t just the responsibility of the HR director or finance director. Companies need to take a view at board level on what the benefits package should be, which will reflect the culture  of the company and show how much employees are valued.”