Employers can maximise the return on investment on their voluntary benefits schemes by adding value to their mix of perks, says Jenny Keefe
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Worries about job losses and soaring bills have prompted many Britons to tighten household budgets. Non-food spending is forecast to fall in the run-up to Christmas for the first time in more than a decade, and although overall spending is expected to rise 2%, this is down to food inflation, according to Verdict’s Retail Futures quarterly forecast published in October.
As employees look to cut living costs, voluntary benefits schemes, which provide discounts on products and services, are in theory more relevant than ever.
Justify investment in voluntary benefits
Therefore benefits professionals under pressure to justify their expenditure should ensure they gain the maximum return on their investment from their schemes by adding value so that staff continue to appreciate and use the discounts on offer. Mark Carman, marketing manager at benefits provider Motivano, explains: “”Employers are reviewing all voluntary benefits spending because some need to quantify the savings employees are making to justify investing in the scheme. A well-constructed and communicated voluntary benefits scheme can help to attract, retain and motivate staff, as well as increase their spending power, at a time when pay rises compared to inflation are at a low.””
However, voluntary benefits schemes are becoming more costly to run. The Employee Benefits Voluntary benefits and salary sacrifice research 2007 found that 50% of employers pay a fee for their voluntary benefits proposition, compared with 32% in 2005. This partly due to the fact that most third-party administrators charge a fee for at least some of their services. The cost to some degree can be covered by the savings made on national insurance contributions where staff acquire tax-efficient perks, such as childcare vouchers, through salary sacrifice.
Given the pressure to justify investment in a scheme, it makes sense for benefits professionals to ensure it is valued by staff. One way of achieving this is to negotiate larger discounts. Just 55% of employers say their schemes offer products that are cheaper than the high street, according to the aforementioned Employee Benefits research. Richard Stewart, director at benefits provider Redbourne, says: “”Ask for bigger discounts and corporate rates.””
To drive a harder bargain, employers should approach retailers, armed with statistics on their voluntary benefits scheme, such as the number of employees it reaches. They could also tell retailers how their discount will be communicated emphasising the free publicity this would be for them.
But employers should not limit their focus to the high street. Voluntary benefits schemes now have competition from a new breed of websites, such as Hotukdeals.com and myvouchercodes.co.uk, which publish up-to-date money-off vouchers and promotional money-saving codes. But rather than viewing such sites as rivals to voluntary benefits schemes, employers could tap into them to find retailers that are willing to offer discounts for staff.
If negotiating with online retailers, employers could remind them of how cheap it is to offer promotional codes as the discounts typically only take a few seconds to set up. If a company won’t give money off its products, it may be worth asking if it will throw in something extra for staff if they make a purchase. For example, they could offer free champagne with an experience day, or a free conditioning treatment with a haircut.
Think local when offering voluntary perks
Lucia Glover, HR officer at online advertising company ValueClick Media, also recommends thinking local. Local discounts are often free for employers to offer and can make schemes appear to be more personalised for staff. The Putney-based company has lined up discounts with both local and national retailers for its 125 UK staff. “”We have approached local businesses to give discounts to our staff, for example, restaurants, salons and bars,”” says Glover. “”We do a huge amount of initial research to make sure we get our employees the best possible deal.””
Glover says it is important to tailor schemes to workers’ interests. “”Look at what is out there and design a package that will appeal to your employees,”” she suggests. “”Our workforce is very active, and most live close to our offices, so the bikes-for-work scheme makes a lot of sense. It has been very popular.””
When it comes to boosting the popularity of a scheme, the art is in knowing what employees want, says Michael Newstead, head of reward and HR information at Ceridian. “”A workforce with lots of parents and carers will value childcare vouchers,”” he says. “”Younger employees are more likely to want discounts on holidays, travel and consumer items.””
One option is to survey staff directly for their views on what discounts they would like to receive. This can also help to add value to a scheme. As people clutch their wallets more tightly, for example, a £5-off voucher for a supermarket is likely to be just as welcome as 10% off a long-haul holiday for some staff.
Tobin Coles, head of flexible benefits at Jelf Group, says: “”Piling a programme with big-ticket discounts is not the best way. Workers may use those things only once a year. You need items that engage people every day.””
Organisations can help staff through the financial crunch by adding discounts on items where they will feel the pinch the most, such as supermarket shopping, gas and electricity bills, and petrol.
Whatever perks employers include in their scheme, they must keep on top of it and not succumb to the temptation of hoping that the plan will look after itself. Matt Waller, chief executive officer of benefits provider Benefex, says: “”Employers need to constantly monitor schemes. They need to look at engagement levels, take-up of benefits, and employee feedback. For example, we have been working with a media company that offered a voluntary benefits scheme for a number of years but had never measured its impact. When [it] looked at this data, it turned out that less than 2% of [its] employees were using the scheme.””
After canvassing staff for their views through surveys and forums, the firm revamped the scheme, and within four weeks, 60% of its employees had logged on.
New technology enables employers to measure a scheme’s value more easily, and a wave of high-tech voluntary benefits systems has turned what was often a matter of chance into a science. Employers can now quickly track how much their schemes are used, what is being purchased, and how much cash employees are saving. They can then use this data to add more of the popular types of perk and identify which others need publicising.
Technology also enables employers to provide easy access to a scheme, through, for example, a benefits portal. David Wall, managing director of provider Logbuy, says: “”By providing your staff with a complete online benefits solution, which encompasses all company benefits, [employees] are able to gain access and take advantage of the benefits quickly and simply.”
Communication can reap rewards. Emails about discounts are free to send, and may well entice employees. Another option is to publicise case studies of employees who have made savings by using the discounts on offer. The ideal communication campaign is regular, snappy and taps into what workers want, says Debra Edwards, a director at voluntary benefits provider CB Affinity. “”Employers need to look at communicating to their employees as if they were communicating a product to their customers,”” she says. “”They will get employees to take action only if they communicate with them on a regular basis and hit them at a time when they might be considering a certain purchase. All bases should be covered by using all the channels available in the workplace.””
Employers could also try targeting specific sections of the workforce. For example, information on childcare vouchers could be sent to parents only. “”Segmented communication is the obvious thing to do if an organisation is large enough to be able to afford it,”” says Motivano’s Carmen. “”Different people will prefer different methods of communication. Take-up rates will be low if staff are not spoken to in a way they can understand. Some prefer one-to-one sessions and others prefer to hear about benefits online.””
But Malcolm Bond, head of reward and benefits at consultancy PES, believes that targeting communication at different workforce demographics will not hugely increase a scheme’s value. “”It is somewhat simplistic to categorise people according to demographics or perceived economic or social class, so it is best to treat everyone the same,”” he explains.
“”Everyone should be able to access all of the deals, and receive notifications of new offers. With easy site navigation, employees can usually find exactly what they want,”” he adds.
“”Voluntary benefits system suppliers may be able to focus new deals to target specific individuals once they have built up a trading history in the system. [However], I would suggest that employers wait for that to happen, unless specific requests are received from individuals or employee groups.
Case Study: Canon
Camera manufacturer Canon has targeted its voluntary benefits offering at helping the company to click with new recruits.
The firm offers a slew of voluntary perks, including private healthcare, childcare vouchers, gym membership and holiday discounts.
Caroline Price, HR director, UK and Ireland, says: “”Voluntary benefits add value to a recruitment package. Certain things are offered as standard nowadays by the majority of companies, and benefits can occasionally act as the decider in employees choosing to accept a role.”” Communication to Canon’s 1,800-strong UK workforce is therefore key, says Price. “”The voluntary benefits we have in place are there for our staff. Communicating them effectively is crucial. We have a dedicated HR site on our intranet, which is accessible and used by all employees, and we also have specific pages on the site that link to external sites providing more information. There is also a dedicated bi-monthly, online HR newsletter,”” she adds.
Case Study: Amey
Amey uses clever communication techniques to boost the value of its voluntary benefits scheme in employees’ eyes.
The consultancy, which works in the highway, railway and property sectors, has 9,000 staff working across 100 sites.
Mark Bradshaw, head of reward and policy, says: “”Communication is always an interesting challenge because a lot of our people work on client sites and so may not be easily accessible through the usual communication channels. A large number are either not online, or able to access our network due to client security, so we continually look at ways to make sure we engage our people.”” The company uses roadshows, desk drops, magazines and postcards to sell the voluntary benefits scheme. “”There is [also] more information available [from the HR department] for those who want to know more,”” explains Bradshaw.
The firm’s HR department has also created employee champions who can rave about the perks to their workmates. “”We train our engagement and wellbeing champions, located at the various sites, to communicate different initiatives to colleagues,”” adds Bradshaw.
Launched in 2006, the voluntary benefits scheme includes a wide range of benefits from gym membership to experience days. It also has an emphasis on salary-sacrifice perks, including childcare vouchers and bikes for work.