If you read nothing else, read this…
• Voluntary benefits schemes need to be effectively communicated to all staff. Online portals, mobile apps and team meetings can be good ways to do this.
• Employers should ensure they prepare a clear business case for the finance director and that the proposed plan ties in with overall business objectives, such as cash back for charity options to support corporate social responsibility policies, and gym and leisure discounts to support health and wellbeing aims.
• Generally speaking, the bigger the workforce, the lower the cost per head should be to implement a scheme.
• Do not be afraid to include quirkier options, such as will writing>
Case study: Open Door to staff savings
About 60% of housing provider Home Group’s 4,000-plus employees have signed up to the organisation’s Open Door Rewards scheme since it was launched in May 2010.
The voluntary benefits programme, provided by Asperity Employee Benefits, enables all staff to access a range of perks online, including discounts and savings at major retailers for food shopping, holidays and other purchases, and to select a suitable reward.
Lynne Griffin, head of HR at Open Door, estimates 20% more staff will sign up to the scheme in the next 12 months. “We wanted to do the best for our [staff] and carried out a lot of internal research through employee surveys, listening groups and setting up an email feedback address to identify what they felt could improve their benefits package,” explains Griffin.
Staff indicated that they wanted more clarity about what sort of benefits were on offer and how they could be accessed. As a result, Home Group introduced the reward scheme on the company intranet so all staff could access it at home or in the workplace.
The company also launched an e-card recognition scheme in July 2010 to reward employees for delivering exceptional performance. The take-up and response so far has been very encouraging. The company now sends an average of 700 e-cards a month, with a total of 4,000 sent per cumulative year to date.
“Linked to this, the best 25 e-cards become our shining stars and are awarded £20 on their online reward and recognition account,” says Griffin.
The shining stars are also featured in the company magazine.
A good voluntary benefits scheme can be an economical way to keep staff happy while pay rises and bonuses are in short supply, says Georgina Fuller
Voluntary benefits schemes are often seen as a ‘nice to have’, an added extra rather than an essential, or a way for an employer to help its employees’ money stretch that bit further in times of austerity. But a good, well-communicated voluntary benefits scheme can have as much impact as a pay rise and be significantly cheaper for the employer to implement. So what are the advantages of voluntary benefits and how can employers make a business case for them?
Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD), says providing a robust, varied selection of optional perks shows staff that they matter. “Voluntary benefits can be a way of increasing the power of employees’ pay, especially in the current climate with wage packets under stress from the cost of living and subdued salary rises. If employers are unable to increase pay, this can be a way to show they still value their employees.”
Some of the most popular voluntary benefits are retail or leisure discounts and vouchers, gym membership, health cash plans, childcare vouchers, private medical insurance and payroll giving, according to the Employee Benefits/Alexander Forbes Benefits research 2011, published in May 2011.
Voluntary benefits can also be more cost-efficient than an incremental pay rise. David Wall, managing director at voluntary benefits provider LogBuy, says: “A voluntary benefits scheme can be provided to employees at just a fraction of the cost of a pay increase, but the savings staff can make can be in excess of £1,000, even if just a few of the deals are used.”
Steve Mason, key account director at Personal Group, adds: “At a relatively low cost per head, the savings an employee can make on day-to-day outgoings are really significant and could even work out more, per annum, than what a finance director would be able to stretch to in bonuses and pay rises.”
However, employers must ensure the programme is communicated to staff effectively, making sure they are fully aware of the perks on offer and that the benefits are being used. Making the most of modern technology and reinforcing the employer brand should help promote the scheme, says Wall. “Strong employer branding, online, offline and on mobiles via a mobile app [application] ensures employees are always reminded that their benefits are being provided by their employer – an important element of their benefits package.”
Timing is also critical when it comes to telling staff which benefits are available, says Mason. “Salary sacrifice schemes in particular, if communicated at the right time and in the right way, can also help offset bad news in an organisation, such as no pay rises, because the tax and national insurance (NI) savings are appealing for both the employee and the employer,” he explains.
Justifying the costs
When it comes to justifying the costs to the finance director, voluntary benefits offer a measurable return on investment (ROI) for both employer and employee, says Alex Bailey, communications manager at benefits provider Asperity Employee Benefits. “Whether introducing tax-efficient benefits that will save both employer and employee a generous amount in tax and NI, or a discount programme that saves an individual thousands, for a cost of only a few pounds per head per year, the ROI is tangible,” she points out.
ROI can be calculated in terms of the implementation costs and the actual value to the employee, says Bailey.
“Employee benefits help to lift the employment relationship out of the merely transactional to generate employee satisfaction, which means an unquantifiable return in happy, harder-working employees.”
HR and reward professionals also need to consider how voluntary benefits can tie in with the organisation’s overall HR and business objectives, especially when making a business case for a scheme. Cotton explains: “Reward and HR professionals should justify the costs to the finance director by working up a business case, showing how voluntary benefits support the business and HR strategies, such as employee engagement and turnover, the costs of implementation and the anticipated benefits from such a scheme.”
When it comes to recruitment, for example, an employer can use voluntary benefits as an attraction and retention tool. Promoting optional extras, such as flexible working or discounts on household bills, could be a way of differentiating an employer from its rivals and attracting new recruits.
Martin Cooper, head of national accounts and marketing at Love2reward, says: “Organisations are constantly looking at ways to differentiate their offering, and voluntary benefits schemes are a perfect example of how they can do that. The public sector, where there is currently little or no likelihood of pay rises or bonuses, could be using voluntary benefits for this very purpose.”
Corporate social responsibility
Voluntary benefits can also fit in with an employer’s corporate social responsibility (CSR) objectives, says Personal Group’s Mason. “Voluntary benefits should be used as an internal channel for promoting the culture and ethics of an organisation,” he explains. “For example, if an employer wants to promote itself as an organisation that cares about the environment, then bikes-for-work schemes and discounts on green products should be actively sourced and integrated into its benefits package.”
CSR objectives, such as having the option to donate cash back to charity attached to a discounts scheme, are just the tip of the iceberg, says Asperity’s Bailey. “If a provider is able to tailor its communication strategy to integrate key CSR messages, then the employer will see great engagement as a result of successful cross-promotion across its voluntary benefits platform,” he says.
When it comes to weighing up the costs of implementing a voluntary benefits scheme in-house or using an external provider, it may depend largely on the size of the organisation. “The more employees are covered by the scheme, the more economies of scale come into play and so it can be economical and efficient to use a third-party provider,” says the CIPD’s Cotton. “For micro and small employers, it may be easier to do it in-house, although that depends on whether they have a resource that has the time and the inclination to run the voluntary benefits scheme.”
Another important consideration is the expertise and knowledge external providers can offer. Using a third party gives access to a pool of benefit specialists that will construct, communicate and administer a programme from start to finish.
“To employ people to adopt all of these roles in-house would be completely unfeasible in comparison,” says Mason. “Employers also get the added value of the buying power of an external provider. If it is established in the market, the deals and discounts it sources will be much more significant than a single organisation can get. You simply cannot put a price on this.”
External providers can also advise an employer on how to make the most of cutting-edge software. “Good providers continually invest and maintain the technology for the platform, user experience and introduction of other new technologies, including mobile apps and the use of social media sites such as Facebook,” LogBuy’s Wall says.
Ultimately, a good voluntary benefits scheme could be a very effective way of making the most of a limited budget and engaging with employees. It is all about sending the right message to the workforce.
As Wall concludes: “It is simple. When budgets are stretched to their limits and salary freezes are the norm, it is important to keep showing support, understanding and care for staff during these particularly challenging times.”
Quirky voluntary benefits
A good voluntary benefits scheme should offer something for everyone. Some of the more unusual perks on offer include:
• Carbon offsetting
• Wine clubs
• Student grants or loan repayments
• Mobile phones and/or computers
• Identity theft protection
• Will writing
• Car care schemes
• Concert, event and cinema tickets
• Group-buying programmes
• Discounts on household bills
Read more articles on voluntary benefits schemes