How to manage legacy employee benefits strategies

One of the biggest challenges for HR and reward professionals starting a new job is resisting the temptation to overhaul, or even ditch, legacy strategies left in place by a predecessor in an effort to make their mark on the business.

Such action is particularly tempting during an economic downturn, as employees at all levels of seniority fight to demonstrate their value to an organisation.

But there are better approaches to a new role to consider, not least because employers will typically measure HR and reward professionals’ success by how they do things, not necessarily by what they do.

Frank Mason, an interim reward consultant, says: “One of the most exciting and challenging aspects of new assignments is making a good start: hitting the ground running and delivering value from day one.

“The phrase ‘hitting the ground running’ has connotations of delivering at pace, getting straight to solutions, bringing in needed changes and enhancements quickly. This is important.

Less haste, more speed

“However, I have learned from experience that sometimes ‘less haste, more speed’ rings true in designing and implementing strategies that will deliver sustainable improvements. So it is important [for a new recruit] to step back and think consciously about [the right] approach before they get started.”

New recruits should first take time to understand their new organisation and any legacy HR and reward strategies in place. This should include an analysis of why these are in place and their cost to the business.

Rachel Stone, partner and head of HR consulting at accountancy firm Smith and Williamson, says: “Preparation is a stage many people miss out. I think there’s a lot to be done beforehand, understanding what is already in place and asking for obvious things, such as scheme rules, guidance details of any legacy or historical schemes that are no longer open, but that still apply to a certain group of staff, and understanding whether there are any exceptions to the normal benefits package.

“Are there groups of individuals at a senior level for whom different arrangements have been negotiated?”

Share information

New recruits can ask for this information to be ready for them on arrival at the organisation if their new employer is reluctant to share information with them before their start date.

Third-party agreements should also be factored into the review process, including product and service provision, contract terms and renewal dates.

Philip Hutchinson, managing director at HR consultancy RePosition, says: “If [renewal dates] are in the next three weeks, [new recruits] won’t have time to do anything else.”

Getting to know key stakeholders, namely an employer’s management team, is equally important. Malcolm Higgs, professor of HR management and organisation behaviour at the University of Southampton, says: “It is really about genuinely being interested in understanding what keeps them awake at night, what are the business drivers, and not really talking HR to them at all.

Engage with the business

“A lot of it is often down to the credibility of the individual. I don’t mean their track record or their standing, but the way they actually engage with the business. If they start from the point of view of ‘I’d really like to understand what [the chief executive officer] is trying to achieve with this business and I really need to understand how [the HR team] can help them do that’, rather than ‘I’ve come up with this great idea for a benefits strategy or a total reward strategy’. If they start to talk business first, HR second, then they have got more chance of having a hearing [from the board].

“It’s about language and about a genuine interest in finding out about the business.”

Christian Verri, senior manager, employment solutions at PricewaterhouseCoopers, says: “I often find that [employers] have not made the link between business and benefits strategies and are more concerned with competitiveness.”

Mason adds: “From high-quality conversations, [new recruits] will also give themselves a chance to understand any political influences on the reward agenda. They should ignore the political realities at their peril.”

Tax implications

As a rule of thumb, chief executive officers typically want to understand how reward and benefits investment is going to bring success to their business, whereas finance directors will be concerned about tax implications and compliance, says Hutchinson.

“[The finance director] will want to know that whatever [the employer] is doing is compliant,” he says. “It’s not just about cost, it’s about risk, too. So [a new recruit] may save themselves money by removing something, but then get a huge fine somewhere down the line.”

An understanding of the changing demands that businesses face because of the economic downturn is key to the dialogue new recruits have with their board.

This means new recruits need to focus more on value for money and assessing value when conversing with their board, rather than talking about slashing costs, says Southampton University’s Higgs.

“HR is going to have to be much more evidence-based and move away from the ‘me too’ approach. The ability to critically evaluate things and knowing the questions to ask is key.”

Ask questions

Matthew Gregson, managing consultant at Thomsons Online Benefits, agrees. “The best thing to do is ask questions,” he says. “Enquire, don’t advocate.”

Employee support is equally important for new recruits. Focus groups are one consideration, as long as employees are not forbidden from speaking on certain subjects, and can work particularly well in helping new recruits understand employees’ perceived value of the benefits on offer.

A stint in the staff canteen can also prove invaluable. Hutchinson advises new recruits to ask employees what they think about their organisation’s benefits and then stand back and listen to their responses. “They will usually complain, but [new recruits] can work with that,” he says.

But he believes that compliance, particularly statutory requirements regarding tax and legislation, should be new recruits’ primary focus. “Stakeholders have to know that if they don’t comply in certain countries, they will go to prison,” he warns.

Smith and Williamson’s Stone adds that the rules underlying some benefits packages are not always obvious.

Penalty schemes

“A number of the housing associations I deal with have penalty schemes in place within their pension arrangements, so if they were to close a scheme, or change the type of scheme they operate, there are significant financial penalties, which might actually change decisions they make around that particular area,” she says.

New recruits do not, of course, have to tackle their new role alone. Their immediate team can prove invaluable in helping them to navigate their way around the business and achieve their objectives.

Project management teams may also prove useful. For example, Hutchinson creates a project management team on arrival at each employer with which he works, and he says external advisers may form part of this.

New recruits should make regular contact with any project teams and advisers they use and, most importantly, pay attention to what they have to say.

Ability to listen

In fact, the ability to listen could make or break a new recruit’s career prospects, because it is only through listening that HR and reward professionals can hope to identify an affordable and compliant strategy with which to steer their organisation’s HR and reward programmes. But strategies must be fit for purpose and aligned with the organisation’s objectives and affordability, rather than based on a new recruit’s assumption about industry best practice.

“A common misconception among HR people is that best practice is a definable thing,” says Stone.

“But best practice is very different for a small and medium enterprise [SME] or an organisation that is just managing to cling on to its livelihood, than it is going to be for a large international employer with far more resources at its fingertips.”

As part of their initial learning curve, new recruits should also be honest with themselves about the job at hand.

As Thomsons Online Benefits’ Gregson says: “If the benefits are in great shape, then [they should] make sure that [they] don’t rock the boat. Maybe the best thing [they] can do is not let high standards slip.”