Freshening up a flexible benefits plan can often involve as much ingenuity as a launch, says Victoria Furness
Coming up with new ways of reviving employee interest in flexible benefits is arguably harder than implementing a scheme in the first place. Obviously, there isn’t the headache of administration or putting in place processes for the first time with an established scheme, but employers also don’t have the advantage of offering something new, fresh and often different to anything the organisation has had in place before.
Philip Hutchinson, principal at consulting firm Mercer, says: “I work on some flexible benefits schemes that have been running for nearly ten years. Quite a few are getting to the stage where really it’s a challenge every year to come up with something new and fresh.”
An obvious place to start when refreshing an established flex scheme is to look at what new benefits can be added. A glance at some of the new benefits on offer from providers will quickly give an indication of what’s currently hot in the market. Vebnet, for example, has partnered with green charity PURE to offer employees the opportunity to offset their carbon emissions through payroll giving.
Another quick win can be achieved by incorporating salary sacrifice arrangements into a scheme in order to maximise the tax and national insurance (NI) savings that are available. Employers that have already done this may wish to review their options as they may unearth other benefits they can offer tax-efficiently, such as canteen food. “If you have a discounted canteen on site, you can put it within a salary sacrifice wrapper (within certain guidelines) so the employer and employee doesn’t have to pay NI contributions on the food they buy in the canteen,” explains Hutchinson.
As well as adding new benefits, employers might want to remove perks that are less popular with staff. An obvious starting point each year is to look at the take-up of each benefit. However, Alistair Denton, managing director of benefits specialist Motivano, warns employers to exercise caution in this area. “You may only have 3%-5% of employees taking up a benefit, but that doesn’t mean it should be dropped. It could be an important benefit to those that have taken it up and the whole [point] of flex is to give choice.”
Rather than second-guessing what benefits employees might want, employers should take time to ask them in the run-up to each election date, whether via face-to-face focus groups or employee surveys. They should also ensure their benefit design still meets company objectives. Pat Appleby, senior communications consultant at Vebnet, says: “So if training and development have moved further up the list of corporate objectives, put in a learning fund. It’s about using flex as a vehicle to match your company’s objectives.”
Organisations can also benchmark their benefits data against others to ascertain how take-up rates compare. Analysing the data internally along various parameters – such as age and gender, for example – could also provide new ways of reinvigorating plans via targeted communications.
At this initial review stage, due diligence should be conducted as a matter of course to find out whether any changes in employment law could have an impact on the benefits offered through the flex scheme. For instance, Charles Cotton, adviser for reward at the Chartered Institute of Personnel and Development (CIPD), says many organisations are still looking at anti-age discrimination, “and how it might apply to benefits, such as medical insurance”.
Given most employers try to incorporate their brand name and ethos into flex at launch, it is worth reviewing a plan from time to time as principles can change and new options can become available. Marion Steel, senior reward consultant at Prudential, says: “Prudential’s scheme is called You Choose. It has been branded this way from the start, and is intended to fit with the Prudential brand by encouraging employees to take responsibility for planning for their own personal requirements.”
Corporate brand messages are constantly evolving, so the annual flex enrolment date provides an ideal opportunity to ensure that the scheme continues to match what the organisation is saying externally. For example, the launch of BSkyB’s carbon offsetting benefit matches its internal and external goals of becoming a carbon neutral company. Paul Bartlett, business development director for reward and benefits at Grass Roots, says: “It is important benefits continue to evolve to reflect the corporate culture.”
Employers are competing against numerous distractions for their employees’ time and attention, so benefits communications need to stand out. Mercer’s Hutchinson talks of benefits becoming “consumerised”. “Those organisations keeping flex fresh and getting better levels of engagement are using similar language as heard on the high street,” he explains.
But be careful not to take the promotion of a scheme too far, says Cotton. “A charity using benefits communications that look expensive could disengage employees if they think the money could have been better spent on the employees or the cause the charity is trying to help,” he adds..
Similarly, a “consumerised” strategy might not apply to companies that have traditionally taken a more paternalistic approach or have an older workforce.
Right tone of voice
The secret lies in using a tone of voice to communicate the benefits package that appeals to those who are being targeted. This is why some benefits managers are starting to segment their workforce and approach benefits communications as a marketer would external communications. By breaking down the employee population into different groups, such as those with children or staff aged under 30 years, employers can communicate with them in different ways.
Another possibility mooted by Hutchinson, and one which many employers don’t yet do because it requires considerable investment, is to change the look of the flex site according to which employee is logging on. “You can re-order the benefits depending on what group the employee belongs to. So if an employee is close to retirement, he or she might see their pension first and other benefits behind it.” A more economical option is to engage with staff through employee case studies, as Siemens does in its My Choice flexible benefits programme.
Employers should also look for other communication opportunities. Matt Waller, principal reward and flex consultant at Benefex, says: “We’ve seen more people ‘piggy backing’ on to other communications, such as a company newsletter.”
Updating the design of a flexible benefits scheme can also provide a way of boosting interest in flex. Moving flex online can help if the workforce is IT savvy. Adding voluntary benefits or total reward statements to the flex package can also give a scheme more substance.
Grass Roots’ Bartlett says he is also seeing more ‘rolling programmes’, which enable people to make their flex choices throughout the year rather than once on the annual enrolment date. It requires more management, systems integration and closer working with benefits providers, but it can be done. “We offer it to organisations and we also use it for our own scheme,” he says.
This appeals to employees because they can take up benefits when it suits them best. Some benefits managers might breathe a sigh of relief at spreading the workload associated with flex over 12 months, while others might despair at having to devise campaigns to promote different benefits more regularly. Either way, it is just one of the possibilities for maintaining interest in established flexible benefits schemes.
As Hutchinson concludes: “The trick to keeping flex fresh is concentrating on things that need improving but not destroying those things that are doing well.” nSenior managers at the AA have been offered access to flex as part of their reward package for the last six years.
Case Study: AA
Senior managers at the AA have been offered access to flex as part of their reward package for the last six years.
Previously, the AA was a division of Centrica, but when the AA was sold by the utility company to two private equity firms, the HR team took a fresh look at how it offered flexible benefits to staff.
The AA went back to basics in identifying what its 550 managers (out of a total employee population of 6,500) wanted from flex with a series of one-to-one briefings and feedback sessions. Based on its findings, the firm, whose businesses include a national driving school and roadside insurance company, decided to re-launch its flexible benefits package focusing on two areas: wellbeing (health and relaxation benefits) and peace of mind (financial benefits).
Benefex was also appointed as the AA’s new flex provider, replacing Mercer, which provided Centrica’s old scheme
The scheme was moved online, so reducing administrative costs, and Benefex was tasked with devising new creative imagery and ways of communicating the scheme to staff.
The AA kept the scheme’s previous name, FlexSA, as managers were familiar with the brand. But a new strapline, ‘You’ve got AA Choice’, was added along with a colour scheme, which ties into the AA’s external corporate branding.
All these changes had a positive impact on take up. Hazel Lee, HR business manager for policy and reward at the AA, says: “When we transferred from Centrica, take-up was approximately 60%, but when we refreshed the scheme, take-up went up to 95%. We’re in our second year now and it’s gone up to 98%.”
Case Study: Siemens
Siemens places a great deal of importance on how its four-year-old flexible benefits scheme is communicated.
Gavin Hayward, head of compensation and benefits at Siemens in the UK, explains: “We have a project team that works on internal communications, and we use some external publicity organisations to help with creating promotions, photos and campaigns.”†
The team comes up with a new theme and variety of media to communicate the scheme each year. For the 2007 enrolment year, its campaign focused on employees’ out-of-work activities and demonstrated how their choice of flexible benefits could support their hobbies, such as the HR executive who took out personal accident insurance with 24-hour global cover to support her travels around the world.
In addition to the communication of the scheme, Siemens has also adjusted the design of My Choice to match its employees’ demands. “For our IT-literate workforces we’re moving to online registration, as we’ve noticed 99% of employees in these groups choose to register online,” says Hayward.
Siemens also adds new benefits where it makes sense to do so, such as cashless spending at its on-site canteens, while also maximising existing benefits, such as discounts on retail vouchers.
Employee take-up of the scheme continues to rise: from 19% in the initial pilot to 70% in 2006 and 74% this year.