As employers often require perks that do not match products that are available, Nick Golding questions how willing the market is to respond to these demands
Not understanding customers’ needs is one of the fastest routes to business failure. No matter how innovative and creative an organisation’s products or thinking might be, unless the business is responsive to demand, it is inevitably doomed.
On this basis, employers’ benefits requirements should be adequately met by providers. And indeed, increased competition means that the pressure is on for providers to bring out products and services that are shaped to meet the needs of employers. Many are tapping into the availability of cheaper technology to develop high-tech online solutions, but the questions is whether these in fact serve their target customer base.
Employers are agreed that there is a huge choice in products and services at the moment. However, some think providers could be more willing to work with them to develop products tailored to their specific needs. For example, Buckinghamshire County Council recently appealed for providers to work with it to develop a motivational gift card onto which points, rather than cash, can be loaded, but none were forthcoming. GillianHibberd, corporate director (people and policy) at the council, says: “What they have done instead is try to sell me something that they have already developed.
“I think more [providers] would be sucessful if they asked us how we could dvelop products together.”
However, Gary Thomas, reward manager at Boots, says: “Providers in the market have become more proactive and innovative. I think if you are willing to pay the provider to do the work there isn’t that much that you can’t get access to.”
One area around which providers appear to have responded to employers’ changing needs is sickness absence. According to the Employee Benefits/HSA Healthcare research 2007, reducing sickness absence levels was a priority for 44% of respondents when implementing healthcare benefits, which is a significant rise compared with the 0.3% of respondents that had the same aim in 2002.
Jon Bryant, head of flexible benefits and communication at Jardine Lloyd Thompson, says: “There has been a huge demand for benefits that look to help employers tackle absence. It is an area that people have been talking about for the past few years.”
This growth in demand for absence solutions among employers has triggered a rise in the number of products available in the market that claim to tackle absence. These include IT-based absence programmes that can report sick employees to managers via text messages or emails which include details of employees’ conditions.
Such products are designed to make the absence reporting process slicker and easier to manage, so limiting the likelihood of staff to being off sick for a significant period of time before steps are taken to begin to rehabilitate them back into the workplace.
Yet, some believe that there is still a gap in the market. “Someone should pull together all the different issues that are associated with sickness absence and do everything in one product. You have systems that pull together the various absence management systems, but I haven’t seen any benefits that cover the whole area,” explains Bryant.
Another area that has proven to be freshpickings for new products is around stress management beyond problems arising in the workplace, and health and wellbeing. Both the market and employers are recognising the fact that problems at home and an unhealthy lifestyle also have an impact on productivity. So some employers, for example, now offer employee assistance programmes (EAPs) that provide support for staff dealing with issues such as bereavement or divorce, as well as a range of wellbeing perks such as online health assessments.
Steven Stanbury, managing director at Workplace Stress Management, says: “Having a range of healthcare benefits that deal with issues beyond the workplace shows that the employer has a new psychological contract with staff, and employers want to do everything they can to position themselves in a positive light. Things like EAPs work well because they deal with issues both in and out of the workplace.”
The aforementioned Employee Benefits/ HSA research, for example, reports that almost half of employers (48%) now make use of EAPs, compared with 29% in 2003. In response to this additional demand, some providers of EAPs have bolstered products with extra options such as face-to-face counselling if issues are not resolved by phone, while others have increased the number of channels through which advice can be sought. One EAP provider, Canada Life, has also recently offered access to online step-by-step counselling guides to help staff deal with issues such as stress.
Organisations’ increased focus on environmental issues is also helping to set the benefits agenda. With the surge in media coverage on carbon emissions, it is no surprise many employers have pushed corporate social responsibility (CSR) to the fore of their business strategy.
As a consequence, a small number of providers have begun to devise ways in which employers can extend an environmental approach into their benefits package, for example, by providing the means for employees to calculate the damage they do to the environment and then offset this by purchasing carbon credits, typically through a flexible benefits scheme.
Vebnet is one such provider that has responded to employers’ growing demand for greener benefits. Through collaboration with one of its clients, Centrica, it developed the idea for a product that enables staff to offset their carbon footprint.
James Verner, sales director at Vebnet, explains: “It came about as we were working with Centrica. We were looking at the different green issues and came up with the idea of offsetting carbon [emissions] through flex. It was genuinely a discovery between a provider and an employer.”
Media firm BSkyB is also committed to providing environmental benefits to staff. When looking to launch a carbon offsetting scheme, it also found a provider that was willing to work with it to develop its idea.
Dev Raval, group head of reward at the media firm, says: “Grass Roots managed our existing benefits product and they have also helped to bring [alive our] carbon offsetting idea.” Yet the fact that a number of providers have yet to launch greener benefits schemes may be seen as an indication that there is still a gap in the market for this type of perk. “Certainly around the climate [change] stuff, we haven’t had very many providers come to us with benefits,” says Raval.
Such gaps in the market can prove frustrating for employers, particularly as many are willing to work alongside providers to develop products to satisfy their demands. Buckinghamshire County Council, for example, has teams of dedicated staff working on improving the environment in the local area, and would welcome the chance to discuss new ways of providing green benefits with providers. Hibberd, explains: “We have specific teams working on reducing carbon footprints, so providers should really be approaching us to make the most of our specialist knowledge.”
One area where providers have been quicker to respond to employers’ demands is in working to reduce organisations’ CO2 emissions around company cars. This market is now awash with new products to help educate drivers about ways to increase their fuel efficiency, and monitor the distances they drive with the aim of reducing the amount of fuel they consume.
The Miles Consultancy, for example, is just one provider that has responded to such demands over the past 12 months with the launch of its Mileage Capture products that allow drivers to closely monitor the amount of both business and personal miles they drive. With this knowledge, many employers offer rewards to employees that keep their miles to a minimum level.
Other fleet providers, meanwhile, have launched online calculators which report the amount of CO2 a car emits in an effort to educate employees and to encourage them to choose a greener car. Manufacturers, such as BMW and Toyota, are also responding to market demands by developing green vehicles at all price points.
Yet one remaining gap in the fleet market is for products that can strike a balance between monitoring the number of miles employees drive, but which do not take a ‘big brother-style’ approach. There is a danger that fleet managers could end up demotivating drivers by installing IT-led mileage capture tools and monitoring where they refuel. Thus, the pressure is on providers to create tools that can be used to monitor staff but will not affect morale.
What employers need from a benefits package will change over time, so products must evolve in line with their demands. Providers should therefore keep an eye on their existing offerings to ensure they remain relevant.
Over the last few years, providers in the voluntary benefits market were in danger of taking their eyes off the ball, as employers offering discounts on a range of products, have had to compete with online retailers and were desperate for new ideas to help refresh their schemes.
Verner explains: “The voluntary benefits market needed an overhaul. The sector had got very old and was being criticised for offering discounts that are akin to those that anyone can find on the internet.”
Some voluntary benefits providers, however, have now begun to adapt their products to meet employers’ changing demands, for example, by launching schemes that include perks such as discounts on green energy and healthy-eating options.
In the past 12 months, other providers have also launched products containing new ideas around voluntary schemes, such as online cash-back services that enable staff to make and bank cash each time they make a purchase through the scheme.
“There are a couple of providers that are getting their heads around what employers need on this by building websites that promote benefits to individuals according to what they bought last time,” says Verner.
By tailoring communication, some providers of voluntary and flexible benefits have managed to tap into a need for personalisation. “The over-riding demand right now is for employers to give staff a personalised experience, and just one place to go to get that,” concludes Verner.
These developments illustrate how a stale market can be rejuvenated by innovative providers that are keen to respond to employers’ ever-changing needs.
Bob Trinder, marketing manager, consumer lines at voluntary benefits provider AIG Europe, explains: “Sadly, too many providers are reactive, but it is in the interests of everyone concerned that they become more forward looking in their approach.”
How have benefits responded to employers’ demands?
- Tackling absence
There has been a high level of demand for healthcare products that help employers deal with sickness absence. Some providers have responded to this demand with the launch of products such as online absence management schemes and mobile phone text alerts to managers for when staff are off sick.†
- Voluntary benefits
Some voluntary benefit schemes have been accused of offering a level of discount that staff can easily source for themselves online. Employers have wanted more from schemes for some time, but it has only been in the past 12 months that providers have begun to launch products aimed at refreshing the market such as cash-back services.
- Greener perks
Fleet management firms have been responsive to the rise in demand of drivers that want to cut the level of CO2 emissions they produce. Online tools that let drivers calculate the amount of CO2 they produce are well established. On the flex side of things, however, the opportunity to let staff calculate and offset their carbon footprint with their flex allowance is available, but only from a small number of providers.
- Personalised perks
Employers are increasingly demanding benefits that are designed to cope with a diverse workforce. Some providers in the voluntary and flexible benefits markets have taken steps towards personalising how and which benefits are promoted to staff, according to factors such as age or marital status.
Case study: Buckinghamshire County Council
Provider that Bucks trend?
When Buckinghamshire County Council developed an idea for a new recognition-based employee benefit for its staff, it found that providers were not willing to build a new product to suit its needs.
Gillian Hibberd, corporate director (people and policy), explains: “None of the providers have been able to come up with what I wanted them to provide. What they have done instead is try to sell me something that they have already developed.”†
The council wanted a motivational gift card that allowed staff to accumulate points that could be converted into non-financial rewards. Although some similar cards are available on the market, these typically require employers to load cash onto the card.
Hibberd was looking for providers that could be more collaborative with the council to help meet its requirements, but found that none were willing to work with it to develop a product for its specific needs.
She adds that she does not doubt the lengths providers go to in order to keep the benefits market fresh, but feels they may not always be hitting the right spots. “I think that many providers are proactive and are trying to come up with new benefits all the time. I think they would be more successful if they asked us how we could develop products together,” she explains.