The big question: Are voluntary benefits just a conduit for selling products?

2010-09-01

We ask the experts for their answers... have your say at the Employee Benefits forum

Dev Raval, director of reward at BSkyB:

I take the view that a good voluntary benefits offering can add a lot of value to an employer's overall reward package.

A voluntary benefits scheme is the only universal benefits plan where there are no distinctions for service, level or tenure. An employee can engage with it from day one. It is also the only part of the benefits offering that employers can do something with on a regular, even daily basis.

More valuable or expensive plans, such as pensions and shares plans, are slow burners, which may not have a material impact for years, if not decades (and that is only if people choose to participate).

At Sky, our voluntary benefits programme, Sky Benefits Extra, is tailored to reflect our business priorities, offering choice and quality. We use it to support initiatives such as protecting the environment, giving people an everyday opportunity to join in. A good communications programme helps us to keep our employees up to date with the service without pushing it onto them. For us, it adds another dimension to our existing benefits package, all of which helps to make us an attractive employer.

The proof of the pudding? The hit rate for Sky Benefits Extra is topped only by the hits for online payslips. In the six months since the re-launch, people at Sky spent more than £1 million through the platform.

Matt Duffy, partnerships manager at Lorica:

This is not a subject where you will find us sitting on the fence. Good voluntary benefits programmes should not be a route to flog products or provide suppliers with commission. Equally, they should not be seen as a wonder product to cure the ills of an organisation that has had to make difficult staff decisions.

An effective voluntary benefits scheme gives employers a low-cost way to offer decent, usable, everyday savings to staff, helping their net pay go further. If employees are counting their pennies but are given a way to save hundreds of pounds a year on grocery shopping, big-ticket items or family treats, then they are going to appreciate it.

Employers that launch voluntary benefits correctly are not only gaining loyal employees, but also find staff revisit their main reward online site all year round, which means they are reminded regularly of what they receive from benefits investment.

Don't be fooled, though - voluntary benefits can have a bad name because take-up rates can be low. Our partner, LogBuy, estimates that only about 27% of companies get the launch right. It is therefore vital to choose a programme with broad appeal for employee demographics, to make sure a sizeable discount is offered by suppliers, and to get communications spot-on. Also, make sure that the deals are easy to access, whether online, by telephone, vouchers or at point of sale.

Organisations that get voluntary benefits right can achieve 80% employee engagement at launch. How could anyone argue with that?

Glenn Elliott, managing director of Asperity Employee Benefits:

Voluntary benefits are the most effective weapon in an employer's benefits armoury. Everyone needs to shop and everyone wants to make their tax-diminished disposable income go further.

Employee discounts, childcare vouchers and cycle-to-work schemes save money for employees at all levels, which no other benefit does. Return on investment on voluntary benefits is unbeatable. Add in total reward statements so that employees really understand the value of their employment package, combine with reward and recognition, and an employer is well on the way to achieving high engagement levels.

Economic turbulence puts pressure on employers to deliver high-value benefits at low cost. Employee discounts used to be 'nice to have', ticking a box rather than being a key component of reward strategy. However, technological advances - including the ability to integrate Web 2.0 functionality - mean discounts are the ideal platform for everything else. All staff have a reason to use employee discounts and this increases engagement with the wider employment package and employer brand. No other mechanism can reach a workforce so easily, effectively and cheaply.

The business models of discount providers have diverged into two distinct types: retailer-funded and employer-funded. Retailer-funded providers take commission from retailers and use employees as a sales channel. By contrast, employer-funded models do not promote particular products or services, attract more retailers and pass on much bigger discounts to staff. This maximises choice and savings, leading to high use, which means high employer value.