Need to know:
- Voluntary benefits now form part of a wider approach to employee engagement.
- Access through mobile apps and online portals has helped to create a new face for voluntary benefits schemes.
- Employees increasingly expect to be offered voluntary benefits as a standard part of their reward package.
Voluntary benefits schemes have long been a mainstay of many employee benefits strategies. However, how they are now positioned and employees’ expectations of schemes are often quite different from when they first appeared.
Although the basics of voluntary benefits may not have changed, employees’ perceptions around using the benefit, and the value it can add, have developed over the years. For example, discount codes and retail vouchers are now an accepted norm within society, with money saving a mentality that many employees tap into on a daily basis. Charlotte Godley, benefits lead for consumer business at Mercer, says: “The use of discount codes is becoming normal really and I think everybody does it, [in] all walks of life and at all income levels.”
As well as this normalisation of discount culture, another influencing factor is the consumerism of employee benefits, says David Walker, chief operating officer at Personal Group. “We now have to treat employees just like consumers, so the quality of the communications, the quality of the platform, the quality of the app, needs to be the same as [an employee] would expect if [they] were a consumer,” he explains.
Voluntary benefits should also be viewed as an investment, and not as a cost, adds Walker.
Improved access to benefits
Access to voluntary benefits through apps, device-optimised websites and platforms has handed control to the employee, allowing for easier access and a more personalised experience. Jack Curzon, head of scheme design at Thomsons Online Benefits, says: “A properly implemented platform [has] revolutionised that online marketplace, giving the employee the ability to go online and manage their benefits in a way that suits them in a modern, technological world.”
Instant access enables employees to make use of deals and discounts when they are on the go, fitting in with employees’ often hectic lifestyles. Debra Corey, group rewards director at Reward Gateway, refers to voluntary schemes as “in-the-moment benefits”.
Some platforms will even flag up high-street discounts that are available when an employee walks past the relevant outlet, says Godley. In addition, the vouchers delivered through voluntary benefits schemes have also received an update with the transition to e-cards.
One of the transformative changes, however, is how voluntary benefits have become embedded in a wider reward strategy. “[Organisations have to] make sure that there is a link between their overall reward and benefits strategy so it’s not seen as a standalone piece that often gets forgotten, but it’s actually seen as being integrated in their reward and benefit strategy,” says Godley.
Personal Group’s Walker adds: “Voluntary benefits are not just being looked at in isolation. They’re part of a wider engagement approach. You’ll see it becoming much more aligned to the broader engagement strategy than it has done in the past.”
The schemes can help to support a number of organisation-wide programmes, for example, financial benefits, such as individual savings accounts (Isas), and how these can be tied into financial wellbeing or financial education programmes. “Voluntary benefits can actually be incredibly influential on staff if they’re offering solutions for financial or retirement planning, so it could be something like an Isa on a voluntary basis,” says Curzon.
A further example would be linking voluntary benefits to wellbeing programmes. If an employer seeks to encourage a healthy lifestyle among its workforce, then benefits such as gym membership or a bikes-for-work scheme can be utilised to help promote the base message within the wellbeing programme, providing an access point that employees can engage with and then action themselves.
One reason why voluntary benefits continue to prove popular among employees is the extensive product and services range that is now available. Corey likens this development to a chocolate selection box, moving away from the days of milk, dark or white solids to now include the added luxuries of pralines, truffles and cremes. “It just appeals to a larger, more diverse group of people,” she says.
While in the past a wide range of discounts may have been presented to staff, now these are more strategic, with the selection designed to help make employees’ lives easier. “Nowadays, those products are actually trying to suit [employees] and give them something that they could be spending money on normally but at a cheaper price,” says Curzon.
Voluntary benefits, therefore, have undergone an image overhaul, transforming from a discount scheme to a more integrated aspect of an employee’s benefits package; a benefit that many come to expect as standard. Being able to provide staff with lifestyle benefits that align with organisational strategy can, in turn, reap an impressive return on investment in terms of employee happiness, productivity, and loyalty to the organisation.
Next Stage utilises voluntary benefits to bolster recruitment and retention
Mental health home care organisation Next Stage introduced a voluntary benefits programme in January 2016, using the scheme as a key driver for recruitment and retention. The programme, provided by Perkbox, enables the organisation to offer its 155 staff over 200 perks, such as free mobile phone insurance and retail and leisure discounts. Next Stage has seen take-up of the scheme reach 86%.
With health and social care work often involving long, unsociable hours, in a typically lower-paid environment, Next Stage wanted to provide potential employees with a strong benefits offering that would entice them to stay with the business.
Alex Handley, recruitment manager at Next Stage, says: “We use it as a recruitment and retention tool because you’ve got to do something different to attract the best staff. Everyone is offering the same job, everyone is offering very similar salaries, so when we offer a voluntary benefits package [such as] this, it’s different to other people; it strengthens our position as being an employer of choice.”
The voluntary benefits platform sits alongside a suite of benefits that Next Stage has in place, including a health cash plan, access to a 24/7 counselling service, attendance bonus scheme, and paid volunteering days.
Since introducing the voluntary benefits scheme, the organisation has seen substantial improvements in both referral rates and staff retention, says Hanley. Before January, only 5% of employees referred potential new hires to the business, however, in the past three months, this has increased to 33%. Before the introduction of the scheme, 58% of staff left within 12 months of joining the business; turnover has now fallen to 13%.
Viewpoint: How can a voluntary benefit scheme help organisations retain talent?
This approach can be important for public and voluntary sector employers competing against parts of the private sector. While public sector employers can often offer a generous pension scheme and leave arrangements, they are very rarely able to offer staff such perks as private medical insurance or company cars.
However, because of their size, they are often able to negotiate preferential deals on behalf of their employees on goods and services. This helps stretch the value of their employees’ pay, as well as showing that they care about their staff.
It is important to segment the workforce so organisations offer discounts on products and services that employees actually value, otherwise staff will fail to be engaged and may even become disillusioned.
One of the possible advantages of offering a voluntary benefits scheme is the savings that an employer can make if the scheme utilises salary sacrifice, whereby the organisation saves on national insurance contributions (NICs).
However, the government’s recent proposals to restrict the use of salary sacrifice schemes could have a negative impact on employers using their NIC savings to fund other projects.
Will such changes result in voluntary benefits schemes becoming less common? Perhaps. However, while they may no longer create employer savings, they can still help organisations retain and engage employees.
Charles Cotton is reward advisor at the Chartered Institute for Personnel and Development (CIPD)