As DTZ approaches its first renewal period, the firm’s flexible benefits scheme has taken on a crucial role in the bid to retain employees, says Jamin Robertson
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When global real estate advisory firm DTZ rolled out a flexible benefits scheme in September last year, expectations that staff would embrace the scheme were high. The firm employs 2,000 professional, IT-savvy staff in the UK and had operated an online total reward package for two years before launching flex, so employees had some appreciation and awareness of the value of their benefits package.
At its launch, 72% of staff logged on to the online flex system, beating the target of 60% set by group reward director Will Rayden. Some 48% of these employees then chose to adjust their existing entitlements. As the firm enters its first renewal period, Rayden is satisfied flex has given the firm’s reward package another string to its bow. “We understood the market was moving towards flexible benefits and we really wanted to offer a complete package. We’re looking to provide a fairly standard base salary, a short-term incentive arrangement that is market driven, then a comprehensive benefits package that is [designed] around commitment, retention, flexibility and choice. The fourth arm of it is the long-term reward plan, primarily based around share based plans.”
Rayden explains that he had looked on as flex swept through other professional firms and saw the opportunity to use it to support the company’s retention aims. “We wanted to provide much greater flexibility and choice around [employees’] package. We really wanted them to log on and see the information that was available to them and the choices available to them. If they decided their [current] package was good enough, then fine, so long as they were making a conscious decision,” he says. Communicating the scheme to employees was helped by the fact they were already used to total reward statements, after the company implemented an online system back in 2003. Because the new flex programme was also based online, staff had a clear basis for comparison and, as such, could identify how the new system might benefit them. The company then distributed newsletters, and held roadshows across the country.
Information was also sent to employees’ home addresses to remind them that family cover was to be made available on some insurance perks. Ensuring staff understood the concept of salary sacrifice was key as this type of benefit forms the basis of the scheme. “It was a very hard message to sell because it’s relatively complex. If you break the communication down into easily-understood pieces you sell the benefit that somebody opting in is going to get a net saving through national insurance,” says Rayden.
During the process, the company was open with employees, explaining that while DTZ made National Insurance (NI) savings, it would pledge to reinvest these in the flexible benefits scheme. One way such savings can be made is through the salary sacrifice of pension contributions, under which scheme staff can also flex their contribution levels. Two of the firm’s pension schemes – an occupational trust-based defined contribution scheme and a group personal pension plan – are offered in this way. Only its defined benefit scheme, which was closed to new members in 1999, sits outside of flex. Depending on the plan, DTZ at the very least matches employee contributions, paying in between 3% and 15% of salary. DTZ also took advantage of its flex communications campaign to talk about the importance of retirement saving, which is something of a challenge due to its young employee profile. “We can only give them the facts but if we’re giving them as much opportunity to understand pensions and the opportunity to save into a pension we’re at least keeping our part of the bargain,” adds Rayden.
The flex scheme itself groups benefits into three main categories: health, security and lifestyle perks. Its healthcare options include private medical insurance (PMI), health screening and dental insurance. Employees can then choose to flex up all three policies to cover their dependants. Within the security package, life assurance cover can be flexed from two-times salary to ten-times salary, while a critical illness insurance policy is also offered. Its lifestyle benefits, meanwhile, include holiday trading which allows employees to trade up to five days from the core base of between 25 and 30 days per year.
This has proven to be the most attractive benefit, with a 16% take-up rate during the scheme’s first year. Retail and childcare vouchers and the short-lived home computing initiative (HCI) were also among the benefits available during the scheme’s first year. And while its contract hire company car scheme operates outside of flex, if employees do not spend their full entitlement any balance can be invested in the flex scheme. Rayden is philosophical about moving the scheme forward without HCI. “We got a year out of it so people that chose it last year have still got their computer and are getting the benefits out of it.” Staff are also encouraged to make suggestions about the type of perks they would like to see in the scheme.
Dental insurance, for example, was included in the initial launch following staff requests. This year, a bikes for work scheme will be introduced alongside a discounted travel insurance deal and a wine club. “We just got that feeling that health and security was a little bit top heavy. We wanted to add a little bit more of a feel-good factor,” explains Rayden. He leads a team of seven pay and reward specialists, and although DTZ outsources its flex administration and some payroll and pension administration functions, Rayden is keen to ensure the company retains its in-house expertise. “We believe a strong model is one where you have specific, dedicated, experienced internal advisory staff who are able to interact well with the business, alongside third-party providers.
The management of those providers is absolutely key so you’ve got to get good staff to manage that relationship as well as develop ideas.” The introduction of flex has also prompted senior management to take a fresh look at reward. “For the senior executive team now, total reward is on their lips. They are not thinking about base salary or a cash bonus or the two combined, they are actually thinking about a good suite of benefits and long-term reward plans,” adds Rayden.
Will Rayden joined DTZ in July 2002 as group reward manager. Since then, his remit has expanded to cover international reward as the company has grown. Before joining DTZ, Rayden worked for IT and business consultancy Capco for two years, prior to which he spent three years at NatWest working in reward both in the head office and the investment banking division. DTZ has embarked on a steady programme of acquisition reflecting its strategic aims to become one of the major real estate providers around the globe. “HR reward has very much been tasked with providing the support there so the role has expanded to cover all aspects outside of the UK as well,” Rayden says. Implementing flexible benefits has ranked as a major challenge during his four years at DTZ, during which time the reward offering was overhauled from a traditional core package to a tax-efficient flex scheme. “Flex is probably the biggest project but the challenge for my team and myself is to replicate the success [with reward] we’ve had in the UK, overseas.” In the UK, Rayden is now ensuring staff understand total reward. “I’m really pleased with the way the total reward concept is taking on,” he says.
DTZ at a glance
DTZ undertakes a range of services connected to real estate, including property management, consultancy and valuation services. Globally, it employs 10,000 staff, 2,000 of which are based in the UK. The origins of the global real estate firm date back to 1784, when a predecessor firm Chesshire Gibson opened in Birmingham. In 1987, the firm continued to grow evolving into Debenham, Tewson and Chinnocks Holdings through a series of acquisitions and floating on the London Stock Exchange that year. Two years later the parent company was renamed DTZ Holdings. The company has continued its programme of growth and acquisition, and now operates out of 200 offices in 40 countries worldwide.