Which of the following benefits do you offer or plan to offer in the future, and to which type of employee?

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1 EMPLOYEE BENEFITS SUMMARY The attraction and retention of top talent has always been one of the biggest challenges that media businesses face. The increasingly disruptive nature of evolving digital technologies and the need to provide highly specialist services has further increased the pressure on businesses to bring in and keep top talent that is in short supply. It s clear that working in the media industry is a lifestyle choice teams are passionate about what they do and thrive in the stimulating creative environment in which they work. It would be short-sighted to suggest that the retention of staff is linked to salary alone a good thing, since with pressure on margins refusing to let up, increases are not always a viable option. With this in mind, we have conducted a survey that reviews the range of employee benefits offered by businesses in the to keep their staff motivated and to strengthen their ties to the company. Our survey received over 100 responses from agencies representing all the major marketing It would be short-sighted to suggest that the retention of staff is linked to salary alone. services disciplines, as well as a number of market research businesses, and TV and film production companies. Employee benefits The benefits most frequently offered by employers are: days holiday (90%) - Creche/childcare vouchers (87%) - Season ticket loans (74%) - Private medical insurance (73%) - Cycle to work scheme (71%) Most companies were pretty even with regards to the spread of soft benefits across the job levels. Interestingly, only 83% offered the same benefits to both part-time and fulltime staff, with almost one in six businesses seemingly in breach of employment law! The greatest variance between job grades came in Which of the following benefits do you offer or plan to offer in the future, and to which type of employee? % All staff Support services Junior staff 30 Mid-ranging staff Salary sacrifice/ salary exchange pensions Creche/Childcare vouchers Holiday trading 25+ days holiday Stakeholder pension scheme Group personal pension scheme Other type of occupational pension scheme Healthcare plan Long term sickness disability cover (PHI) Life cover (death in service) Critical illness cover Travel insurance Flexible working Cycle to work scheme Duvet days Sabbaticals (up to 1 month) Sabbaticals (1 month +) Paid sabbaticals Enhanced maternity benefit Enhanced paternity benefit Private medical insurance (employee) Private medical insurance (employee and family) Personal accident insurance Product discounts Season ticket loans Retail vouchers Health screening Sports/gym/social club membership Employee assistance programme Personal skills training Senior staff Board level Don t yet offer but plan to Kingston Smith Employee benefits

2 There does not appear to be a noticeable imbalance between what benefits employers think their staff value and what they are giving them. respect of the extension of private healthcare to the employee s family, which was largely the preserve of senior staff. Encouragingly, there does not appear to be a noticeable imbalance between what benefits employers think their staff value and what they are giving them. However, the results show that gym membership was one of the most commonly requested additions to existing employee benefit schemes. Top 4 morale and motivation boosters: - Training and development (58%) - Recognition from management (54%) - Belonging to a successful team (42%) - Increased salary (41%) Pensions The onset of auto-enrolment has put pensions centre stage, with many companies having now reached their staging date. For the respondents who had not yet autoenrolled, 50% provided pensions, with their contribution being between 1% and 3% from the support services level upwards. Larger contributions tailed off slightly, with 16% electing to pay between 4% and 5% from support services up to senior staff, reducing to 10% for contributions between 6% and 9%. Meanwhile, 23% of the companies did not pay anything into their employees pension pots, reducing to 13% when reaching senior level. For those companies that were auto-enrolled, there was a clear 50/50 split between employers who chose to increase their employer contribution above the minimum requirements and those who did not. For the respondents who had not yet auto-enrolled, 50% provided pensions, with their contribution being between 1% and 3% from the support services level upwards. Flexible working Since legislation ruling that all employees have the right to request flexible working came into effect in June 2014, the consensus expectation was that the number of requests for flexible working would increase sharply. However, there was only a 9% increase when compared to our 2014 results. This small flux can be attributed to the fact that requests continue to be largely associated with childcare, with 59% of respondents saying that all requests came from working mothers with only a quarter reporting such requests from new fathers. The majority of requests came from mid to senior staff, which is probably more of a reflection of the age at which people tend to start families than anything else. Have you received flexible working requests from your staff? 1.2% 8.4% Yes and accepted all of them Yes and accepted the majority of them Yes and accepted the minority of them Yes and accepted none of them No 14.5% 54.2% 21.7% The rates at which these requests were approved remain broadly consistent with The 2014 legislation means that this benefit should essentially now be loosely built into every business, and staff have the right to appeal should their request be declined. The rates at which these requests were approved remain broadly consistent with 2014 when the legislation had only just come into play; this year s results show that 25% had accepted all of them, 63% had accepted them in the majority of instances, and only 10% had accepted the minority of instances, with 1% declining all requests (although this was most likely a single request). 2 Employee benefits 2016 Kingston Smith

3 Bonus schemes The implementation of bonus schemes is often viewed as an effective way to motivate the team to deliver on behalf of the company. Only 7% felt that there was no direct link between productivity and bonus so it is unsurprising that a substantial 85% of respondents run a bonus scheme. Nearly two thirds of respondents had a scheme that was completely at the discretion of the directors, giving business owners flexibility and the freedom to apply certain criteria that tie together employee performance and reward. 25% ran their bonus scheme on a structured basis and 14% on a mixed basis. 99% of those who operate bonus schemes focus on offering bonuses at senior level; this then goes down slightly to 91%, who only reward at mid-level and above. 83% implement their scheme from junior members of client-facing teams upwards and 80% run schemes for all staff within the business, from support services upwards. Company performance is the most significant factor when calculating bonus payouts, with 35% basing this entirely on overall company performance against targets and 41% basing this on a mix of individual and company performance. Meanwhile, the targets that people are measured against are, in the majority, fee income (54%), profit (54%) and new business (41%).This clearly sets a connection between the success of the company and personal success, encouraging team work and commitment to providing an optimum service. For those paying bonuses out of the company s profits, between 1% to 10% of the profit is put into the bonus pool for 61% of respondents, with the remainder mostly falling between 10% and 15% and just a few companies in the 15% - 25% range. The majority of companies will also consider future working capital requirements and future re-investment requirements before setting any bonuses. Do you run a bonus scheme? 11.8% Yes, on a discretionary basis Yes, on a structured basis Yes, on a mix of discretionary and structured (please specify % split of discretionary and structured) No, but we are considering it No 4.7% 21.2% 10.6% 51.8% Company performance is the most significant factor when calculating bonus payouts, with 35% basing this entirely on overall company performance. When the pay-out is based on salary, the majority of junior and mid-ranging staff would receive between 3% and 10% of their salary (often 1 month of salary), whilst there was a much larger scale for senior staff of between 6% and 20% in the main. If yes, what is your bonus scheme based on? Individual performance against targets Team performance Overall company performance against targets Part individual, part team performance against targets Part individual, part company performance Part team, part company performance Other 40.5% 4.1% 6.8% 10.8% 20.3% 35.1% 9.5% equality Unsurprisingly, gender pay equality is a very divisive topic. Whilst 59% of respondents agreed that gender pay gaps were present, 44% felt that they were no worse in the media sector, with only 3% feeling that the sector is lagging behind others in dealing with the issue. This sentiment was corroborated by the Guardian last year, which reported that government statistics gathered during the labour force survey showed the pay gap in the creative sector to be less than in the STEM industries or banking. 1 Of course, no worse than banking isn t anybody s idea of success in this area - there remains much work to do. A confident, possibly naïve, 19% of companies felt that pay inequality is not an issue, whilst, on the flipside, 22% felt that the industry should be giving greater emphasis to resolving it. PR was a particularly optimistic sector, making up nearly half of the respondents that felt gender equality was improving and a third of those who felt confident that any pay gaps could be closed. Seen as the sub-sector of media and marketing services that is most dominated by women, it could be that this optimism may be symptomatic of a reduced exposure to gender-related inconsistencies. Whilst 59% of respondents agreed that gender pay gaps were present, 44% felt that they were no worse in the. However, whilst a CIPR survey recently reported that women make up 70% of non-manager roles and take up 48% of the senior roles in PR consultancies, industry commentators have suggested that these relatively encouraging statistics may have come as a result of women setting up their own businesses in response to experiencing gender inequality as their careers have progressed Kingston Smith Employee benefits

4 Given the variance in opinion, it is perhaps surprising that less than four in ten businesses have policies in place to measure any differences in pay, with a further 12% looking at implementing this. However, with legislation for pay gap reporting for all commercial firms with 250 employees or more coming into force, it is something that businesses in the sector really ought to be considering, because these limits will enevitably reduce, forcing more companies to have to report. A confident, possibly naive, 19% of companies felt that pay inequality is not an issue. Which statement(s) do you agree with most when considering the subject of gender pay equality in the? % present in the but no more so than in other sectors especially poor in the inequality is an issue but more is being done to resolve this in the media sector than in other sectors inequality is an issue and the is lagging behind others in dealing with it gaps can be closed gaps will never be fully closed improving in the Agencies are under great pressure by the industry to provide gender pay equality The media sector as a whole ought to make gender pay equality a greater priority The future It is clear that a one size fits all benefits package is not appropriate. Employers need to open communications with their employees in order to assess what is important to them and from that create an employee incentivisation strategy. By implementing a varied benefits package that complements the personal objectives of each employee, business leaders can make their team feel integral to the success of the business a very effective means of talent retention and motivation. Many of the traditional benefit packages such as private medical insurance and pension contributions are now considered standard, almost compulsory if you are going to be competitive in recruiting and retaining star employees, so some creativity outside of the normal parameters is needed. Since 84% of respondents indicated that cost was the principal consideration behind the setting of an employee benefits scheme, with 71% attributing morale and 63% mentioning company profitability and competition respectively, agencies appear to have a Business leaders can make their team feel integral to the success of the business a very effective means of talent retention and motivation. number of variables to juggle in order to get the balance between agency margins and employee satisfaction right. 4 Employee benefits 2016 Kingston Smith

5 About Kingston Smith Kingston Smith LLP is one of the UK s top 20 audit and advisory firms, and a founding member of Morison KSi, a worldwide association of independent accountancy firms. Kingston Smith s West End office, with its team of six partners and 60 staff, specialises in advising media businesses. We are able to provide a full range of audit, accountancy, tax and corporate finance services, as well as specialist ad-hoc advisory services on all financial issues. Such specialist areas of advice include employee incentive schemes, benchmarking, succession planning, exit planning, business valuations, profit improvement reviews, business plans, preparing for sale, pre sale tax planning, mergers and acquisitions. Our clients are spread across the media sector, covering all the key disciplines within marketing services, TV and commercial production, theatre, media technology, publishing, consulting and music. Our services have been developed to advise growing, successful businesses at every stage of their growth, with our clients ranging from start ups and sizeable independents through to multinationals and AIM listed groups. International expansion is of increasing significance to businesses growth plans. At Kingston Smith, we support our clients as they move into new markets, providing commercial and timely advice throughout the transition and using our Morison KSi network to assist you locally. As part of our international focus, we are also commercial partners of the Creative Industries Council ( which works with the UK government to put creative businesses at the heart of the UK s productivity and growth agenda. For more information on Kingston Smith s services to the, visit Some of our deals Our corporate finance team is proud to have advised on a number of transactions in the, including: Contact us If you would like to discuss any of the matters arising in this edition or how we can help you, please contact one of the Kingston Smith partners by or on Kingston Smith Charlotte Building 17 Gresse Street London W1T 1QL T Amanda Merron, Partner amerron@kingstonsmith.co.uk Esther Carder, Partner ecarder@kingstonsmith.co.uk Graham Tyler, Partner gtyler@kingstonsmith.co.uk Ian Graham, Partner igraham@kingstonsmith.co.uk Nicola Horton, Principal nhorton@kingstonsmith.co.uk Peter Smithson, Partner psmithson@kingstonsmith.co.uk Val Cazalet, Partner vcazalet@kingstonsmith.co.uk More information about Kingston Smith and our services to the can be found at: Kingston Smith LLP is registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. Any opinions, views or comments contained in this document are intended for those clients and contacts of Kingston Smith LLP and associated companies to whom it has been distributed. No responsibility for loss occasioned by any person acting or refraining from action as a result of the material in this newsletter can be accepted by the firm. The investments or services mentioned in this document may not be suitable for all recipients or be appropriate for their personal circumstances. The information in this document is believed to be correct but cannot be guaranteed. Opinions or comments expressed constitute our judgement as of this date and are subject to change without warning. This document is not intended as an offer or solicitation to buy or sell any investment nor is it to be construed as a personal recommendation. Past performance is not necessarily indicative of future performance. If you do not wish to receive this publication or any other information in future, please us at pd@ks.co.uk.