Many employers are building on the flexibility and choice available in a flexible benefits scheme by becoming more creative in the way they provide the perk.
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- More than one flexible benefits window could drive engagement and take-up.
- It can help to keep a flex scheme and its communications fresh.
- Employers must be aware that some benefits cannot be open more than once a year.
- Moving away from an annual window could complicate administration.
Employers are not only offering an increasingly wide range of benefits under flex but, in many cases, are enabling employees to access these outside of a scheme’s annual enrolment window.
Mercer’s 2014 EMEA Employee choice survey in benefits report , published in June, found that 53% of respondents provide some form of choice in the flexible benefits they offer to employees.
Boosting engagement and take-up
By having more than one enrolment window a year and offering wider choice, employers are likely to boost engagement and increase take-up of the benefits on offer .
Steve Watson, commercial director at Portus Consulting, says: “There is something engaging about opting to do it more than once a year. It helps keep the scheme and communications fresh, but it is also about having benefits that make it engaging for employees to have more than one window.”
Moving to multiple flex enrolment windows can also suit employees’ lifestyles better.
Most of the benefits that can be offered more flexibly throughout the year, such as bikes-for-work schemes , may have a seasonal appeal and are typically launched two or three times a year.
Car leasing is another perk that can be made available virtually all year round . Mobile phones can also be offered more frequently because they are tied to contracts that terminate at various times of the year and are not necessarily aligned with an employer’s annual flex window.
Matthew Gregson, consulting director at Thomsons Online Benefits, says: “Employees want more consumer experiences with their benefits package. They want to be able to take it now and employers are being forced to respond to that.”
But even if employers want more flexibility in when to offer insurance-based benefits via flex, it may not always be possible to do so. For example, insurers might suspect that staff will take up benefits when they become unwell and need them.
Clare Sheridan, head of flexible benefits at Capita Employee Benefits, says: “The only issue around providing true flexibility is in the insurance market, which has not developed in some areas to support this.”
Buying and selling holiday is another benefit that may be restricted to a single enrolment window because it needs to coincide with the employer’s holiday year.
Communication for more than one flex window
When considering moving away from an annual flex window, there are pros and cons for employers to consider, particularly when it comes to communication .
When offering multiple enrolment windows, employers need to ensure communications are continuous throughout the year and built into the recruitment process to ensure all employees understand what they can do and when.
“Employees expect choice, and demand for it has been increasing,” says Sheridan. “However, employers need to be careful to tie it to their communications to ensure it is backed by a strategy.”
BNP Paribas is one example (see box below). It has tied opening a new flex window in with a number of events it runs in the workplace, such as health and wellbeing fairs.
Employers also need to consider the administrative costs of offering multiple enrolment windows , which will vary depending on employee headcount, scheme complexity and benefits provider costs.
Terry Gostelow, account director at Staffcare, says: “Employers need to be mindful when moving away from the annual enrolment window of the salary sacrifice benefits and contractual information, because problems can occur in the administrative area.”
However, flex technology has improved to such an extent that many aspects of administration are now managed by automated systems, which could even enable employers to open a window every month.
Danone (see box below) does this for employees who have undergone a lifestyle change such as marriage, having a baby or a change in hours and/or pay.
Chris Wilson, a partner at Reward Consulting Partners, says: “This allows individual benefits to be selected and managed independently. There is a desire for employers to empower employees to be in control of their benefits, so that what they have at any point is what they want or need for their particular lifestyle or personal circumstances.”
Mobile technology could also affect the way benefits are chosen , for example if employers want to be able to allow staff to access and renew benefits at any time.
Introducing extra flex windows during seasonal events can boost staff engagement and drive traffic to the online portal to remind employees of the full range of benefits on offer, but employers should be conscious of the potential administrative burden.
But Dan Ball, total reward manager at Tyco, who will be speaking at Employee Benefits Live on 24 September, says: “I feel it is the right way to go. It supports so many aspects of HR and it can help capture a positive moment in an employee’s lifecycle. Offering more choice at more than one time is a step forward.”
Mike Bourne: Technology can help open multiple windows
Employee choice in flexible benefits schemes is becoming widespread.
However, there are only two good reasons for offering employee benefits from the employer’s point of view.
The first is that the benefits add to the organisation’s brand, making it more attractive to potential employees and reducing recruitment costs.
The second is that the organisation can offer benefits at a lower cost than the employee could obtain on the open market, usually because of economies of scale.
Both these advantages have to be weighed against the cost of benefits provision, and this is not free.
The employer takes on the administrative burden of offering more benefits choice and currently this is being controlled by making it simple and providing one enrolment window a year.
Increasingly, instant selection and choice is available through the internet. When done properly, this moves the cost of administration from the provider to the recipient because they have to fill in the information required, which is processed automatically.
Employees are increasingly expecting the flexibility offered by an online benefits system and employers will find online solutions cost-effective. For these reasons, employers are moving to offer flexible benefits ‘on demand’.
But some benefits, such as health insurance , do not fall into this category. Staff can’t pay for health insurance only when they are ill; they have to have the cover for a certain period.
I expect to see health insurance, dental insurance and similar offerings continue to be provided on an annual basis only, while the many other benefits on offer increasingly become available more than once a year to meet growing employee demand.
Mike Bourne is a professor of business performance at Cranfield University
Case study: Danone
Food manufacturer Danone enables its staff to make changes to the perks they have selected through its flexible benefits scheme when they go through a lifestyle change, so they can quickly adapt their benefits to their new needs.
The organisation, which won ’Most engaging benefits package’ at the Employee Benefits Awards 2014 , opens benefits windows for such staff every month for certain benefits.
These benefits include childcare vouchers, the pension scheme, retail vouchers, gym membership and access to its health cash plan.
The monthly windows open for any employee who undergoes a lifestyle change, such as getting married, divorced, having a baby, seeing a change in hours or pay or returning from special leave.
The annual enrolment window for Danone’s scheme, provided by Thomsons Online Benefits, is in April.
John Mayor, head of UK rewards at Danone, says: “The annual window gives employees the opportunity to select about 30 benefits, but opening a monthly window gives employees the chance to opt in or out if they see a change in their lifestyle.
“We tend to look at more of lifestyle events and have the data to see whether a marriage is coming up, someone has given birth or an employee has seen a change in hours or pay.
“We open a window for the employee to look at, for example, flexing down or up on benefits that they may need to change.”
One benefit that is not offered flexibly is Danone’s bikes-for-work scheme .
Mayor adds: “We are very flexible and try to make anything available that would influence the way our employees live their lives.
“Bikes for work tends to be annualised because of the administration that goes behind it and the repayment period of 10 months. It is often easier for benefits such as that to keep within one window.”
Case study: BNP Paribas
Bank BNP Paribas opensnew flexible benefits windows when it runs related events.
Such events have included corporate social responsibility fairs and health and wellbeing fairs , which enable the organisation to communicate the flexible benefits on offer and open windows to help increase engagement and take-up.
Its scheme, provided by Vebnet, allows staff to make changes to childcare vouchers, bikes for work, retail vouchers and pension contributions.
It also lets employees add dependants to their critical insurance cover if they get married.
Tom Hiles, group benefits manager at BNP Paribas, says: “We have got a high take-up per benefit because we flag up the open window during certain events, which helps boost engagement.”
For example, bikes for work used to be offered outside flex, but now BNP Paribas offers the benefit quarterly to coincide with the summer. It also opened an enrolment window during its health and wellbeing fair.
Hiles adds: “We tend to do that regularly. If there is an event on, we will always open a benefit window. We have spent a lot of time and effort on making sure the process of more than one window works for our employees .”