How is the voluntary benefits market evolving?


Need to know:

  • New market entrants have helped to rejuvenate the voluntary benefits market.
  • DNA tests are one of the latest voluntary benefits on the market.
  • Technology is driving innovation.

The rebrand of Asperity Employee Benefits as Reward Gateway in 2013 gave the voluntary benefits market the kick-start it needed to review its workplace appeal.

The arrival of new market entrants has also helped. These include Fizz Benefits, which launched in 2012, and Perkbox, which launched in 2015.

Mark Carman, director of communication services at Edenred, says: “The good thing about new entrants is that they come at [the market] with a fresh view. In the same way that Reward Gateway rejuvenated voluntary benefits in [the UK], these new [providers have] come along and raised the profile and set the bar, so existing [providers] need to adapt and evolve and compete again.”

These new market entrants offer technology-led platforms and apps that provide employees with access to regularly updated retail deals designed to fulfil voluntary benefits’ long-recognised raison d’etre: to help employees’ salaries stretch further. Deals range from discounted cinema tickets, restaurant offers and healthcare products, such as discounted dental healthcare to free wellness classes and mobile phone insurance, all accessible via a mobile device.

Personalisation software helps target employees

In addition to mobile access, some providers use personalisation software, which intuitively ‘knows’ the perks that are of interest to individual employees, enabling their platforms to tailor the offers staff see when they log in to their account.

Saurav Chopra, chief executive officer and co-founder of Perkbox, says: “We use embedded personalisation technologies that you’d typically see in sites such as [online retailer] Amazon and [online movie and TV series streaming provider] Netflix. We’ve embedded the same logic into our system, so it’s really behavioural; it learns dynamically, based on what [employees] are interested in, what they’ve clicked on, what they’ve viewed and what they’ve redeemed as a perk.”

For example, an employee who buys discounted cinema tickets may subsequently see a movie streaming deal appear at the top of the list of perks being promoted when they log into their account.

“In this day and age, technology is absolutely key to [voluntary benefits]. You just have to look at millennials [employees typically born between the early 1980s and 2000], who are obviously hooked to their mobile phones. What technology does [with voluntary benefits] is really drive instant gratification,” adds Chopra.

The future success of the voluntary benefits market relies on providers’ ability to mirror the retail market’s savvy use of technology, such as personalisation, says Jason Taylor, chief executive office at Fizz Benefits.

Pricing models also need to change; providers need to stop charging employers per employee and instead offer a fixed hosting fee that covers an unlimited number of staff, Taylor adds. “Providers should only make money if they save employees money. That’s only fair,” he explains.

Workplace consumerism is key

Market success also depends on organisations’ ability to treat employees as consumers. Edenred’s Carman agrees, but adds that as much as staff expect to be communicated with as consumers, gaining their permission to do so via their mobile devices may be challenging.

“A lot of people don’t have a [work] mobile phone, so employers are going to have to work quite hard to start invading employees’ [personal] time with voluntary benefits. They will have to give them a good reason why they should consider it,” he says.

This requires employers to give their workforce access to voluntary benefits that are wide ranging and relevant, and that help to make their salaries stretch further, as well as extending availability to employees’ family members.

The latest voluntary benefits on offer to staff include discounted holidays, flights, car insurance and mobile devices. More unusual perks include DNA tests and chocolate clubs that deliver chocolate to an employee’s door. Wearable technology devices, such as Fitbits, are also expected to become of increasing interest.

But this does not mean that organisations should become preoccupied with offering their employees the latest benefits on the market, says Fizz Benefits’ Taylor. “Employers get too wrapped up in what’s trending, when all that [employees] want is value,” he adds.

Gaps in the market

Nevertheless, providers should be mindful of gaps in the market. Eldercare support is a case in point, and could perhaps be made available in the form of vouchers that offer employees and employers tax and national insurance breaks, in the same way that childcare vouchers currently work.

But for now, providers are working out how to respond to employers’ increasing interest in more strategic approaches to voluntary benefits package design. For example, a number of organisations are considering how to best link their voluntary benefits platform to their reward and recognition programme.

Perkbox is positioning itself to cater for this demand, says Chopra. “We’re investing heavily in a lot of gamification technology, such as leader boards and things that allow reward and recognition [programmes] to be plugged directly into HR systems, so that it makes it easier and seamless for employers to deploy reward and recognition [perks],” he explains.

But not even the quirkiest benefit offering or perfect strategy design will guarantee high benefit take-up rates, so organisations must ensure that they are effectively promoting the programmes in which they have carefully invested. This requires a year-round voluntary benefits strategy that offers all employees access to benefits that they actually want and value.

Understand staff needs

Organisations can identify the benefits that are of interest to their workforce by conducting staff surveys and creating focus groups, and organisations with existing voluntary benefits platforms can request benefit take up data from the previous year from their provider.

But benefits professionals must first ensure that they fully understand how their proposition is positioned.

Kim Honess, head of flexible benefits consulting at Willis Towers Watson, says: “What people mean by voluntary benefits is often two different things. Probably the most common understanding is a portal on which employees can select the benefits that they like [which may include] cash back and shopping vouchers, as well as bikes-for-work schemes and childcare vouchers.

“The other approach is where there isn’t any core funding. It’s where additional benefits are going into a flex[ible benefits] plan, such as gadget insurance and eldercare, which is really just adding more benefits into flex. We’ve seen more of this in the last few years.”

Once the approach is clarified, a clear and engaging promotional campaign that reminds employees of the benefits on offer and how to access them is essential. Promotional tools may include workplace posters and credit-card-sized information cards that employees can carry in their wallets.

It is also crucial that all promotional literature is jargon-free. Chopra says: “There are a lot of solutions out there and a lot of jargon around benefits and terminology, which employees don’t really understand and don’t really care about.

“All they care about is whether they’re happy at work. And if they’re not happy at work, perhaps because they’re not happy with their boss or because they don’t feel recognised or because they don’t feel that they’re paid enough, then they’ll leave.”

This possible outcome should be enough to motivate employers to offer their employees an appropriate and engaging voluntary benefits package that helps to retain them. With providers eager to accommodate their demands in the race to win market share, there is no excuse for employers not to do so.

SnowflakeSnowflake Gelato uses voluntary benefits platform to retain staff 

In 2015, Snowflake Gelato implemented a voluntary benefits platform, provided by Perkbox, to help to retain staff.

The luxury ice-cream maker, which employs around 50 staff with an average age of 26, has seen its staff retention rate increase by approximately 50% over an eight-month period and the average tenure of its employees improve since implementing the voluntary benefits platform a year ago.

A return on investment was key for the fledgling employer when it went to market to source the platform.

Asad Khan, managing director and founder of Snowflake Gelato, says: “As a small [organisation], [the platform] benefits employees by offering [them] access to customised benefits that deliver more reward for them and a lower cost for us. As an employer, it’s a very smart way to keep staff happy and give them some nice perks, which aren’t going to cost the earth [for us].”

Mobile phone insurance, cinema tickets and restaurant vouchers are among the most popular perks available to staff through the platform.

The voluntary benefits platform is offered as part of Snowflake Gelato’s employee engagement programme, alongside a points-based scheme through which employees who deliver outstanding customer service can earn financial rewards to spend on voluntary benefits.

“The scheme rewards either a team or individual employees who go over and above what we expect them to do,” says Khan.

The scheme, Snowballs, was launched last summer and was also designed to help staff optimise their performance and hit their targets.

Snowflake Gelato’s wider employee engagement efforts include regular staff social gatherings involving drinks and dinner at which employees’ birthdays, work anniversaries and milestones are recognised and celebrated.

Ian 2View point: Employees need a tip-top consumer experience at work 

The Consumer Rights Act was designed to protect our rights when we shop on the high street or online, but the principles need to extend to the workplace as employees increasingly expect to be treated as consumers.

This means that employers need to ensure that their voluntary benefits package, and indeed their whole benefits offering, is of the quality and description stated in their promotional literature and that staff receive excellent customer service as and when they take up their chosen perks. But one of employers’ greatest challenges is in identifying how best to communicate with their workforce to ascertain their needs and to encourage them to peruse their shop window of benefits.

I am sure that the majority of employees have a mobile device of some kind, but this does not mean that they wish to use them to engage with their employers’ social media campaigns or intranet sites, unless of course they are given a good reason to do so. This is why organisations need to consider how to create a digital agenda that supports and engages their digitally-minded workforce.

A good start is for employers to ensure that their voluntary benefits offering caters for the respective needs of different generations because it is crucial that they feel that their needs are understood and, at least to some extent, met.

Also, employers need to develop an employee experience brand and marketing map, along with a clear idea of the different workforce segments that they wish to target.

The wide range of benefits now available makes it almost impossible for employers to promote all of them to all employees all of the time, so voluntary benefits providers’ personalisation technology is really helpful.

Employers should consider any new product or service that helps their employees’ workplace shopping experience emulate that experienced with their favourite retailers.

Ian Hodson is reward and benefits manager at the University of Lincoln