Companies in Lithuania do not yet give enough importance to their reputation and social responsibility when it comes to attracting employees: these factors are more important to potential employees in choosing an employer than they are to companies. But employers’ and employees’ opinions coincide with regard to the importance of remuneration and incentives. That was shown by opinion polls of Lithuanian residents and company heads conducted this spring by Spinter Tyrimai on behalf of INVL Asset Management, one of Lithuania’s leading asset management companies.
Views regarding social responsibility differ
The study showed that employees in Lithuania choose an employer first of all on the basis of remuneration – a full 99% of working respondents indicated that as very important or somewhat important. A similar 98% of company heads take the same view. In second place are employee benefits and incentives, which are important for 88% of employed people. That is a view 86% of heads of companies agree with.
Meanwhile, 83% of the employees surveyed said that in choosing an employer it was important that the company have a good reputation, and 78% said the company’s social responsibility was important. But fewer employers give such importance to a company’s reputation or its social responsibility – 78% and 63%, respectively.
According to the survey of people who work, employee benefits and incentives are more often given importance by those with the biggest income, and a company’s reputation and social responsibility are more often given importance by respondents with a higher education.
“The survey results show that in choosing an employer, employees look not just at the pay and benefits package they’re offered, but also at the company’s reputation and social responsibility. You can see, meanwhile, that employers give less attention to those areas even though they are important in competing for talent,” said Dr Dalia Kolmatsui, Head of Pension Funds & Retail at INVL Asset Management.
Half of employees would save for a pension themselves if their employer did too
According to Dr Kolmatsui, one opportunity for strengthening a company in the area of social responsibility is to add pension accumulation for employees to the benefits package and thus help provide for employees’ future welfare.
“The employer’s role in saving for an employee’s pension is extremely important. By providing a chance to get contributions to a pension fund, the employer is able to not only encourage employees to take care of their future, but also to contribute to their future well-being. While in other countries employer accumulation for employees’ pensions is common, in Lithuania only one in 10 companies that offer incentives do that,” Dr Kolmatsui said.
Moreover, in Lithuania that is also highly effective due to the financial advantages of transferring contributions to an employee’s pension fund versus the short-term incentive of a bonus on top of their wage. It is calculated that, under the tax system that will take effect in 2019, an employer’s total labour costs would be the same for giving an employee an after-tax cash bonus of 100 euros as for contributing 168 euros to his or her 3rd pillar pension fund.
That effect arises because when an employer transfers contributions to a 3rd pillar pension fund which do not exceed 25% of the employee’s annual employment-related income, the taxes that apply to a wage bonus do not apply to the pension fund contributions. Taking advantage of this effect by additionally contributing to employees’ ability to save more for retirement is recommended.
The survey of people who work shows that pension accumulation incentives are also relevant for employees. They named that as the second most important means for encouraging long-term loyalty to an employer (after wage bonuses), something desired by 34% of people who work. Moreover, half of employees said they would agree to contribute to supplementary accumulation in a pension fund themselves if their employer made matching contributions.
The representative survey of heads of companies in Lithuania regarding employee motivation was conducted on behalf of INVL Asset Management in May this year by Spinter Tyrimai, with the participation of 316 companies throughout the country. In the representative survey of Lithuanian residents on incentives that employers offer, conducted in April this year, 1015 persons aged 18-75 were interviewed, including 673 respondents working under employment agreements.
INVL Asset Management, which is part of the Invalda INVL group, manages 2nd and 3rd pillar pension funds and mutual funds as well as alternative investments and individual portfolios. Over 190 000 clients in Lithuania and Latvia and international investors have entrusted the Invalda INVL group’s companies with the management of more than 650 million euros of assets.
Note: When referencing these survey results, please identify the source.