Future Strategy 2006 – IT developments personalise flex

IT developments will soon allow employers greater personalisation of flex schemes to all workplace segments, says Alison Coleman

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Flexible benefits have been evolving at a steady rate, driven in part by developments in technology that have streamlined the communication and delivery processes.

Technological advances are likely to carry on shaping the way employers provide flex, and the way that employees use it, but what many believe will have a more profound impact on the future of flex are changes in the dynamics of the employer/employee relationship.

One aspect of that will be an inevitable trend towards the individualisation of benefits. Peter Reilly, an associate director of the Institute of Employment Studies, says: "If employers want to keep their staff in a fluid and competitive recruitment market, they will have to satisfy their needs on a more individual basis. That means investing more effort in finding out what those needs are."

Other factors likely to impact on the future development of flex are changes to the nature of work.

William Nelson, group analysis manager at the Future Foundation, says: "The same technology that has driven the growth of flexible benefits will also release the workers from their office-bound work locations, and employers will have to rethink their flexible benefits provision, in terms of content and delivery."

Estimates suggest that by 2020 a large proportion of the working population will be free to work from home or other locations away from the office. Shifting employee demographics should, in theory, make it easier for employers to offer flex on a performance-related basis, as some experts feel may eventually happen.

"With a large proportion of teleworkers, employee contribution will be measured purely by output rather than presenteeism," adds Nelson.

But this scenario does raise other possible problems. "If flexible benefits were to be awarded on a performance basis, the danger is that parents of young children or eldercarers may feel they are at a disadvantage because they can’t work as many hours as someone who has no care responsibilities," he says.

Changes to social demographics are also likely to influence the future of flex, with fewer married couples, and more women having children later in life creating a demand for more flexible benefits that appeal to a single person.

As for the future take-up of flex schemes, most benefits experts agree this will be increasingly linked to levels of employee engagement. The Royal Bank of Scotland has already carried out research that demonstrates a strong correlation between workers who are more engaged and those who use the flex system. Conversely, the more disengaged employees were found to be less likely to use flex.

Going forward, employers will have more tools at their disposal to assess and monitor levels of employee engagement. Using sophisticated assessment technology, they will also have the capability to nail down the differentiating factors within departments, teams and individuals, and then segment their flex schemes, or as Reilly puts it, "individualise it", accordingly.

Tim Fevyer, senior manager for compensation and benefits at Lloyds TSB, has seen at first hand how his own organisation’s flexible benefits system has evolved since its launch in 2003. He expects future changes to be consolidatory rather than radical, and says: "The ultimate aim is to make flex as simple and attractive to as many people as possible."

He also envisages a segmented approach to communicating flex, using different methods for different populations of the workforce such as older, younger, those with long service and newcomers.

"There will be people who pick up the concept virtually and those who prefer face-to-face meetings. The future of flex will be about catering for everyone’s needs," says Fevyer.

Long term, Fevyer believes that employee perceptions of the value of flexible benefits could make it a negotiating point for future job candidates.

"It will depend on content. If you focus on the things that people really want, they will make a difference to their decisions when they move. If what you are offering really means something to them, flex could well be a factor in terms of their next move," he says. A broadening of the flexible benefits concept and package could pave the way for smaller companies that want to introduce flex systems, for example, by initially focusing on one or two of the higher profile tax-efficient benefits, such as home computing initiatives. The provision of voluntary benefits by some small employers is a start.

Ultimately, any future trends in flex will remain inextricably linked to employment trends, which are changing rapidly.

Peter Thomson, director of the Future Work Forum at Henley Management College, says: "The employment relationship is moving away from one that was close to a much looser arrangement. We are already seeing people with multiple jobs and portfolio careers, and increasingly, we are going to see more self employment, with people hired on a contractual basis.

"Employers are going to have to think outside the box in terms of their flexible benefits packages, because as much as these are valued by employees, they are not going to be hooked in by the long term benefits such as pension schemes and insurance that form part of the current flex schemes," he adds.