How benefits can build a loyal workforce

Following a sharp decline in 2012, the Australian mining and resources (M&R) industry is coming back strong. According to the 2019 KPMG Australian Mining Risk Forecast, two thirds of global mining leaders are feeling confident about growth in the sector. Here in Australia, the number of people working in mining has more than tripled since 2007.1 It’s no wonder the same report includes access to talent among the top 10 concerns of mining leaders.

The retention challenge
The pressure of renewed industry growth on a limited skills pool is perhaps one of the greatest challenges for HR leaders in the sector. Securing the head count to meet rising production targets calls for competitive incentives. When a skilled workforce can pick and choose between well-paid options, it is hard to build loyalty if it does not take much of a salary increase for employees to move on. With budget constraints still in place following the industry slump of recent years, HR teams are looking for smart and costeffective ways to engage and retain key staff.

When your employer’s duty of care extends beyond the mining site to helping you buy a home and vehicle you can be proud of, you get bragging rights for being with the best mining company for lifestyle as well as take-home pay

Hidden value in employee benefits

Employee benefits are not a new concept for HR leaders. However, the financial value of salary packaging, and the range of salary packaging benefits available for different industry sectors, may not be widely understood. 

What can often be overlooked is the value of a salary packaged benefit compared with an employer-funded allowance. At face value, salary packaging out-of-pocket expenses may seem less of an incentive for employees and candidates compared with employer-funded cost subsidies. But when you take into account the scope of what can be packaged, plus net savings in income tax, payroll tax and fringe benefits tax, salary packaging can be a clear winner for both employer and employee.

Attracting key talent to the far reaches of Australia is critical for the mining sector and would be a tall order without the standard relocation and remote area housing allowances. But when a comprehensive salary packaging program is in place, including relocation, remote area benefits and novated leasing, employees find they’re able to enjoy a better lifestyle in remote locations as a result of taking up these benefits. These lifestyle extras, along with the financial value that salary packaging brings, can lead to a positive and sustained engagement between M&R companies, their workforce and remote area communities.

Take stamp duty, for example. An employer-subsidised relocation package might cover flights, removals and the transportation of home contents, but it won’t stretch to the costs of buying a home. For an employee putting down roots in a remote area, paying for stamp duty from their pretax salary can potentially reduce their income tax liability by thousands of dollars. That substantial saving from salary packaging stamp duty, and mortgage interest over the life of a loan, can become a critical factor in the retention equation. When an employee is salary packaging the full suite of benefits and is approached by a competitor, the potential pay rise on offer could be cancelled out by a hike in their tax bill. Their list of reasons to stay put is that little bit longer.

By supporting employees in settling down in remote towns, mining companies can also reap benefits with respect to their standing in the local community, and the industry overall. Boosting the numbers in terms of housing stock and the settled population can improve relations between mining businesses and the local councils. When your employer’s duty of care extends beyond the mining site to helping you buy a home and vehicle you can be proud of, you get bragging rights for being with the best mining company for lifestyle as well as take-home pay. Both of these can go towards building a strong and positive reputation for a mining company among the community and employees.

That substantial saving from salary packaging stamp duty, and mortgage interest over the life of a loan, can become a critical factor in the retention equation

The education and communication challenge
It’s clear that a comprehensive salary packaging program can deliver significant financial value and lifestyle benefits for M&R employees. However, one of the key elements of a successful benefits program is access to onsite education and engagement. A face to- face conversation with a salary packaging specialist helps employees navigate complex tax rules and the full implications of their choices, which can go a long way towards ensuring there are no unintended negative outcomes from the whole experience.

This can be challenging in an M&R context when the majority of employees are in remote locations and face-to-face communication opportunities are limited. Sharing information through digital channels isn’t viable when much of the workforce is not sitting at computers or on digital devices.

Working with major M&R companies nationally, employee benefits provider Maxxia take a very hands-on approach to getting remote area employees up to speed on benefit choices at a range of mining sites. Given that production targets are of paramount importance to senior leaders and general managers onsite, time available to speak to employees during working hours is limited. Anyone visiting the mine must also be supervised and across all safety protocols. Having frontline staff with deep mining sector expertise based in these remote locations is important to ensure effcient and effective delivery of customer service and engagement programs.

For a large mining client looking to launch remote area benefits to their employees, Maxxia’s local frontline staff, who know the mining environment and are fully aware of site constraints, were able to run face-toface benefi ts advice sessions for 80 eligible employees in just three days. These individual consultations were highly successful in driving strong uptake of salary packaging for remote housing benefits. With the buzz this created at the site, the number of employees participating has now grown to more than 200.

How a business gets more from employee benefits
Effective communication to boost participation is just one way Maxxia can support HR teams in M&R in fully realising fi nancial value from their benefits offerings. As one of Australia’s largest employee benefi ts providers, Maxxia can deliver in-depth analysis of a mining company’s existing program, including a performance benchmark comparison. Just as it addresses the unique needs of employees and matches these with potential benefi ts, Maxxia can also identify gaps and opportunities in the financial value of a benefits program to the business itself.

That lift in value comes from payroll tax savings driven by higher participation, as well as a more efficient approach to promoting and delivering benefits, with support from Maxxia’s team of specialists. Outsourcing to Maxxia also provides additional risk management, with dedicated and experienced professionals managing FBT compliance and end-of-lease liability.

The ripple effect of a benefits boost
In terms of engagement within the business, an effective benefi ts program can deliver wins at many levels. For a start, payroll tax savings make a clear and measurable difference to budget targets. But key leaders also come to appreciate the positive impact benefits can have on the employee value proposition, particularly when they experience it first-hand. General managers at mine sites who enjoy the benefi ts of salary packaging themselves quickly become ambassadors for the program. Not only does this drive uptake by other employees but it also adds to the importance and influence of the HR team at the site level.

By focusing on the quality and value of a benefi ts offering, an employer can become known for its high level of care for the employee experience, both on and offsite. The positive ‘chatter’ this creates, within a company and across the region, can do much to attract skilled employees. But it also becomes an important part of the company’s overall brand story in a high-profile and competitive industry.

To download the eGuide on How your employee benefits program can unlock loyalty in a remote workforce, click here.