Offering benefits that appeal to staff is vital if employers are to boost employee motivation, so Jamin Robertson looks at how to reward staff of all ages.
Case study: AS Watson
Article in full
It’s a scene played out regularly in workplaces worldwide. A senior manager gives a short speech recognising an employee’s many years of continued service. This is followed by the presentation of a traditional long service award such as a gold watch or carriage clock. But what is going through the worker’s mind may not be so obvious. Although the gift may be accepted with the grace that it has been given, bubbling underneath is the fantasy of smashing the item to smithereens in an open display of disengagement and disdain for the reward. In a bid to avoid such employee disengagement, open or otherwise, employers may choose to look at their workforce’s age profile to ensure benefits are better aligned to their interests.
Andy Lister, head of benefits at the Grass Roots Group, agrees that employers can target benefits provision at certain stages of an employee’s life, although he is opposed to varying a benefits package between different groups of staff. “Childcare is one [example]. You will know when your employee is going on maternity or paternity leave, and know how many you’ve got in that bracket. These link into other benefits. If you’ve got a private medical insurance scheme which covers children as well, they are going to want the benefit there. The key is to get something that is broad-ranging that meets the needs of employees whatever their age group,” he explains. He adds that in the early stages of their career, younger employees may be interested in short-term perks or cash rewards.
Later, staff may have a greater interest in benefits that provide them with a degree of security such as pensions and healthcare. Junior staff and those on low salaries are also more likely to value smaller rewards such as the discounts offered through voluntary benefits schemes that allow them to stretch their salary. Many may also appreciate receiving financial education or access to independent financial advice, particularly if they are saddled with student debt or are looking to step on to the property ladder. In contrast, older staff may be more concerned with lifestyle adjustments, such as the opportunity to reduce their hours or achieve a better work-life balance as they approach retirement. Healthcare perks, such as life cover, may also be seen as more of a priority, particularly if employees have remarried and have a second, younger family.
Alan Gibbons, head of human capital consulting at Buck Consultants, believes certain age groups exhibit a consistent behaviour, which can help employers put together a targeted motivation strategy. “[Younger employees] are more interested in short-term bonuses, and flexibility in things like holidays. People should put more effort into educating the under 30s. The problem is less the choices [that employees] have, and more [about] their engagement with the system and their reluctance to get to grips with the options open to them. It’s amazing what small things will motivate and retain junior people, whereas if they are not happy, people will move jobs for a couple of grand or less.”
mployers which may be looking to tailor their benefits packages in this way, however, need to ensure they don’t breach age discrimination legislation due to come into effect in October. Under the terms of the Employment Equality (Age) Regulations, employers cannot offer benefits only to staff of a certain age, however, as long as these are made available to the entire workforce there is nothing to stop organisations targeting communications at specific employee groups. Exemptions to the legislation mean that long service awards can still be justified if they fulfil a business need. Some in the industry foresee changes. “Older people are really going to start asserting themselves. It’s almost like saying ‘we’re all [aged] 25 now’. It’s going to take a really big [burden] off older people. They think now they have a licence to stay and a renewed confidence in their right to benefits,” says Gibbons. Jonathan Haskell, chief executive officer of Michael C Fina Worldwide, believes employers will follow the US trend of rewarding long service more regularly. “There, 35% of companies start to reward at five years of service. Here [in the UK], there’s a slab of traditional blue chip companies that [still reward] at 20 years.” However, firms won’t be compelled to change their practices, provided the awards based on service fulfil a business need, says Lister. “If the business need is to reward experienced workers, it doesn’t make any difference what age they are, because it’s allowed by the draft legislation.” But not all agree that tailoring a benefits package according to employees’ age is the best approach to boosting motivation. Many consultants refuse to be drawn on what perks are suitable for different demographics, and instead encourage employers to offer a flexible package.
Nicola Cull, senior consultant at Watson Wyatt, says: “You can’t make assumptions about personal circumstances.” She adds employers should also consider factors such as the industry the organisation operates in and employees’ education level, which will result in different needs within the same age demographic. Gibbons also believes that the distribution of benefits based solely on age-based assumptions is an outdated practice. “Employers have got to stop trying to look at banded age groups. You could face all sorts of problems if people perceive the whole thing is biased or if they are excluded. People are very interested at every age in every benefit now. Once upon a time you could have said someone who is [aged] 45 is interested in pensions and healthcare. At the moment, you will have so many different attitudes within that [middle aged] group, how do you [satisfy them with a one-size-fits-all approach?]”
Haskell, however, believes segmenting employees by age alongside other factors helps to channel appropriate rewards. “It boils down to gender, age, and profile. You can take that further and [profile based on] county, and postcodes. We analyse the profile of the employee, and selections are based on hard facts and stats.” Lloyds TSB, for example, offers all of its 70,000 employees access to the same pool of benefits but tailors its communication strategy to suit different staff groups. It has found that sorting employees by career stage can help to enhance engagement and motivation. As a result, take-up of its benefits has risen by 10% in the past year. But employers should take care not to rely on stereotypes in an attempt to tailor a limited menu of benefits to demographics. A flexible benefits scheme is one solution. “The act of choosing and the act of managing your benefits package is what turns most people on,” says Gibbons. If flex is not suitable, voluntary benefits can also circumvent the issue of what is appropriate.
John Sylvester, director of motivation and incentives for P&MM, cites travel discounts as one example. “You can either go clubbing to Ibiza or go on a Norwegian cruise. It caters to a wide range of tastes, so it’s very popular. Employers looking to implement benefits to motivate their employees should also consider the power of peer recognition, which can work for all demographics. The memory of a ceremony where a high-performing employee receives a gift in front of their colleagues will probably stay with them longer than a token gift. “Providing managers deliver it in a team situation, the item is more of a token gift. The real motivator is peer recognition,” says Sylvester.
Case study: AS Watson
AS Watson, the parent company behind Superdrug, Savers and The Perfume Shop, has rolled out a voluntary benefits package to its 20,000 UK staff, in order to provide perks that appeal to employees of all ages. Debra Corey, head of European reward, says: “[We’ve] put in something our employees will appreciate but not at a huge cost to the business.” When designing the package, representatives of the company’s three businesses were brought together to ensure it would appeal to the firm’s diverse workforce. “I had a representative from each of the business divisions that could speak on behalf of the [employees] because I think Savers may have an older demographic than Superdrug. You can’t just assume that because people are a certain age they’re motivated the same way. The great thing about voluntary benefits is that it’s such a far-reaching perks plan.” She added that employers could get a feel for what drives employees through profiling but this has its limits. “[You can look at] a combination of age, and people who are single or married. The good thing about the HR team is they’re out and about in the stores all the time, I do think they’ve got a good feel for who their employees are.”
Motivating employees of all ages
Consider tailoring reward communications according to a number of factors including employees’ age, salary, and job function. Tailor communications so that featured benefits appeal to target groups. Use financial education to underline the value of benefits such as pensions and share schemes. This will help foster employee engagement with an organisation. Don’t make assumptions. Four-times death-in-service cover might appeal to mortality-conscious younger employees while adventure vouchers may click with older staff. Employees may remember the plaudits from being recognised for their efforts longer than they will value a token gift.