The timing of total reward statements when launching flex can be crucial and must suit an organisation’s culture, says Nick Golding
Most gamblers will tell you that there is no such thing as a dead cert. But while this may well be true, those who like a flutter will also tell you that there are always ways of trying to minimise the risk and reducing the amount that could be potentially squandered.
Employers who are in the process of, or are considering, launching a flexible benefits plan may feel like they are taking a similar risk as there is never any guarantee that staff will use the scheme enough for the organisation to gain a return on its heavy investment.
Some employers, however, are seeing the value in distributing total reward statements, giving detailed reports on the value of the benefits package, before launching flex to help pave the way for a decent take-up rate and, in turn, reduce the risks involved in the launch.
Mark Ashton, senior consultant at Watson Wyatt, says: “It is a very good way of educating staff around the benefits on offer prior to a flex launch. Many of our clients take this approach, because going straight into flex would be like missing out a step.”
This type of education could be especially valuable if staff have a particularly low level of understanding around perks, for example, where they are dotted around the country so communication has been more difficult.
Jacqueline Otten, principal at Towers Perrin, explains: “In some organisations people have a very low level of understanding around their benefits and communication is not very sophisticated, so employers may find value in taking things slowly and using total reward statements to work up to flex.”
Total reward statements can also be used to obtain feedback from employees by including questions around which benefits they are likely to use and value. Employers can draw on this information to design a flex scheme around the types of benefits that staff have indicated will be well received and taken up.
If the majority of employees say that they particularly value their organisation’s pension scheme, for instance, employers should know not to make changes to this benefit if it can be avoided.
Mark Childs, director at consultancy Total Reward Solutions, explains: “[The feedback] is an essential pre-requisite [to flex] because you don’t know how much value employees attach to their benefits so you don’t have a compass to navigate your way through a flex project.”
As well as educating staff around the value of benefits, total reward statements can also be used to build excitement before a flex launch and help to market the new scheme. Launching a scheme without any sort of build-up can be detrimental to its eventual success, so any marketing and advertising material that can generate interest before a launch should reduce the risk of flex flopping.
As total reward statements are personalised for individual employees, they can be used to advertise the advantages of a forthcoming flex plan for each member of staff, so increasing the buzz around the scheme.
“Statements can help to raise awareness and excitement for employees, so employers should issue statements and announce that flex will be available in [say] three months,” explains Ashton.
Total reward statements also offer organisations the chance to cleanse employee data, if distributed before the launch of flex. This can include details of employees’ home address, the amount of annual leave they are entitled to, and any other information about which benefits they are entitled to take. As all of these details are included on a total reward statement, it is a good chance for employees to flag up any inaccuracies.
James Verner, sales director at Vebnet, explains: “If you are at all worried about the accuracy of employee data, total reward statements allow it to be validated by staff, so when flex is launched it will be populated with the correct information.”
However, the view that total reward statements are a stepping stone to flexible benefits is not shared by everyone. In fact some theorists say that pay and benefits are only one part of total reward. There are circumstances in which total reward statements distributed after, or at the same time as, flex is launched is more appropriate.
Employers which offer a good benefits package where staff are fully aware of the options available, and take-up rates are high, for example, may find that there is little benefit to be had in using total reward statements as a build up to a flex.
These employees would probably see total reward statements as a waste of time, offering them information that they already have, rather than delivering what they want.
“In organisations where there are a broad [range of] benefits on offer, [at] an investment bank for instance, a slow build up [to flex] may simply annoy employees. They would just want the big-bang approach,” says Otten.†
By the same token, many employers are under tight deadlines to implement a flexible benefits scheme launch. In these cases, issuing total reward statements may hold up the process. “If a business wants to put a flex scheme in place against a tight timeline, which a lot of companies are doing, they should be doing flex first, and statements afterwards just as a ‘sweep up’,” says Verner.
At the other end of the scale, employers that offer a less comprehensive benefits package may also be better off avoiding total reward statements before they launch flex.
If an organisation’s existing benefits package is fairly weak, it may prove worthwhile to wait until after flex has been launched to show off the benefits on offer to staff using total reward statements. “If you haven’t got a great package you don’t want to go through total reward statements before flex. Go straight into it and then roll the statements off the back of it. Highlighting the lack of benefits provision is not a good idea if you want to be seen as a rewarding employer,” explains Verner.
Employees will soon cotton on to the fact that they are being told they have very few perks, which could act as a demotivator. “If you have few benefits and you make a big song and dance about it with total reward statements before a flex launch, people will know they are being told they don’t have very much,” says Otten†
Case study: EC Harris
Property consultancy EC Harris distributed total reward statements to its 1,600 UK employees before it re-branded its flexible benefits scheme in July 2005.
The statements helped it to communicate scheme changes and minimise the chances of take-up rates being low.
The statements were also deemed to be far more effective in communicating and preparing staff for the re-brand than simply sending out a letter to all employees.
Joanne Wotton, reward manager, says: “We wanted to be able to explain to employees what changes had been made to the scheme, and total reward statements helped us communicate the re-brand.”†
One useful side effect of issuing total reward statements before the launch of the re-branded flex scheme was that it allowed the organisation to check all the employee data held was accurate. “This was not our primary aim of sending out the statements but it was handy,” admits Wotton.
Currently, 86% of EC Harris’ employees actively participate in its flexible benefits plan.
Are total reward statements a stepping stone to flex?
- They can help to provide information about the perks on offer at an organisation so that staff can make decisions about the incoming flex programme. This can boost take up and offer employers a return on investment.
- Total reward statements can be used to help cleanse employee data, because personal information such as home addresses will be included on the statements, so employees can flag up any inaccuracies before the launch.†
- If a company has a good benefits programme that is well utilised and communicated, there is no point in telling people something that they already know. In this instance, the launch should be followed up with statements at regular intervals.
- If employers offer a poor benefits package there is little advantage to be gained from highlighting this fact. Statements should be issued after the launch of flex to help communicate the value of the new package to staff.