The service provided alongside a benefit is crucial to the way it is perceived and lately, providers have developed all means of communicating with staff. It is important to understand what forms of communication staff want, says Sam Barrett
Case study: Eli Lilly
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Whether a benefit is voluntary or automatically provided to everyone as standard, the way it is introduced to staff and the ongoing service they receive from its provider will affect employees’ perception of both the benefit and, ultimately, their employer.
Keen to spread their message and increase take-up, benefits providers have developed all manner of ways to communicate with staff. As well as the traditional brochures, providers can provide web copy for intranet sites, features for employee magazines, posters, CD-Roms, videos, personalised letters and dedicated helplines. Literature can also be branded with the employer’s name, although this will often depend on the number of employees. Some providers are turning to even more unusual ways to reinforce the advantages of their products.
Legal & General, for example, offers its group risk customers a range of health and lifestyle options including health checks, health improvement campaigns and even workplace vending machines that contain healthier options such as fruit and cereal bars. Julian Webb, an executive director at financial services firm Fidelity Investments, says: “With all these options, it’s important to understand which forms of communication employees want.” He adds that before rolling out a new pension scheme, for example, it is vital to talk to a sample of potential members to understand their requirements.
“This will shape the communication package we put in place, influencing not only the media we use but also the messages we use.” As well as the more traditional media, benefits providers, especially in complex areas such as pensions, have developed interactive methods of communication like modelling tools for products such as pensions or flexible benefits schemes. Being able to model different scenarios, for instance, how an increased contribution might affect their eventual pension, can help an employee to gain a better understanding of a product and lead to increased take-up.
These tools can be included on intranet sites although paper-based versions are also available. While these give employees the freedom to explore different benefits options by themselves, in some situations, financial advice can also be beneficial. However, there is some debate in the market about whether it is always necessary. Products, such as pensions, income protection and critical illness insurance, are complex and there can often be issues about suitability, especially when an employee has already undertaken their own financial planning.
Fuelling the debate, the Department for Work and Pensions is currently running a pilot in conjunction with the Association of British Insurers (ABI) to find out how financial information and advice affect the take-up of pensions. In all likelihood this will find in favour of financial advice, especially because ABI research has already demonstrated that employees are nearly twice as likely to consider saving for retirement if they receive information from their employer. But not everyone is so convinced. Although Iain Oliver, head of pensions at provider Norwich Union, agrees that financial advice can improve take-up, he adds its success is dependent on the type of advice offered.
“You can offer anything from seminars to face-to-face advice sessions but whatever you provide, it’s vital that there is commitment from the employer and the employee otherwise it doesn’t work. If an employer makes very little commitment then the take-up among employees is very low.” Fidelity Investment’s Webb also believes it isn’t always necessary to provide financial advice, preferring to ensure guidance is available to help employees make their own informed decisions. “There are situations such as pensions transfers where advice is important but otherwise I believe it’s important not to be too prescriptive.
To get a good take-up, keep things as simple and straightforward as possible.” Ongoing communication is then important to ensure a high level of take-up. Benefits can be promoted whenever there is any change in the underlying contracts or when annual benefits statements are sent out. Additionally, messages can be tailored to employees’ circumstances, for example, the pension provider could write to an employee to let them know that they qualify for a higher pension contribution or make them aware of the lifestyle option on their pension as they approach retirement. As well as promoting their products, communication is also likely to take place between the provider and the employee which relates to the servicing of the product.
Some products are more service orientated than others, for instance employee assistance programmes and health screening, while, with products such as medical and travel insurance, communication will be an important part of the claims process. Nick Howard, European principal of Mercer HR Consulting, explains: “Employers should definitely check the service provided by the benefits companies both before they choose them for their benefits package and on an ongoing basis. If there is poor service, this reflects on the employer as, in the employee’s mind, the benefit is provided by the employer.” Many of the benefits providers are happy to let employers check out their call centres and administration service before taking out their products.
And, to ensure service doesn’t slip, Howard recommends putting a service standard agreement in place. This will include details of the speed and quality that service providers aim to deliver. With some providers this detail is automatically included within their contracts. At Standard Life Healthcare, for example, its service standards include answering telephone calls within 16 rings, answering correspondence within five days and assessing claims within 24 hours. Claire Ginnelly, head of intermediary sales at Standard Life Healthcare, believes service is key: “With some products you’re not necessarily buying something tangible: it is all about the service your employees receive.”
Case Study: Eli Lilly
Setting up flex needn’t be a bitter pill Excluding its field workers, pharmaceutical manufacturing company Eli Lilly has around 2,500 UK employees based across four sites.Last April, it launched Lillyflex, a flexible benefits package for staff. This offers a wide range of benefits from life assurance, critical illness and salary sacrifice AVCs through to shopping vouchers, home computers and wellbeing benefits such as subsidised health screening and dental cover.
Julie Osman, director of benefits and pensions at Eli Lilly, says: “We interviewed all the service providers to check the cultural fit and service levels. After all, if there’s a problem with service, our employees turn to us to resolve it.” She also set up quarterly reporting with the providers. Osman then worked with the benefit providers to put together a launch programme, setting up roadshows. “Additionally, all the firms involved set up helplines to deal with staff questions,” she explains.
Literature was branded with Lillyflex to ensure a strong message and this was supported by a website that employees could access on computers at work or home. The strategy certainly paid off. Some 73% actively selected their benefits when Lillyflex was launched and Osman is confident for the future.
Tax-free financial advice
Today, only around a quarter of employers include financial advice as part of their benefits package according to research from independent financial advisers Origen. But, as a result of the introduction of a tax exemption on pension advice, it is likely to become much more common.
From 6 April 2005, the first £150-worth of pensions advice will be tax free. To qualify for this exemption, advice must be made available to all staff. Depending on location, £150 would pay for between one and four hours of one-to-one advice although larger employers may be able to negotiate better terms or set up group sessions.
Additionally, some advisers will automatically include free financial advice because it can help to improve take-up of benefits. But be careful, if employers provide more than £150 of advice to an employee, the whole amount is taxable.