Flexible benefits packages are a tool that helps recruit as well as retain staff, but it’s the way that they are structured that can give employers the edge, argues Alison Coleman
When it comes to staff retention, flexible benefits schemes that allow employees to choose their own perks up to a value agreed with and funded by the employer, are renowned for their ability to engage and motivate employees. But the extent to which they are effective at attracting talented people in the first place will depend on how each individual flex scheme compares with the benefits offered by other employers.
Tobin Coles, head of flexible benefits at consultancy Jelf Group, says: “Nowadays, in any company employing 1,000 or more people you would expect flex of some type. So to use it as a recruitment incentive, your scheme has to be more attractive than those of your competitors and easily communicated to potential recruits, people who are not familiar with your organisation,” he says.
This means working closely with the recruitment agencies to make sure that they fully understand the scheme and can convey the value of the benefits and the flexibility on offer to job candidates.
Alistair Denton, managing director of benefits provider Motivano, says: “Throughout the recruitment process, candidates are judging your organisation culturally. A total package that includes flexibility and choice indicates a strategy that is focused on people who are valued by the business. In short, the organisation cares, and that carries tremendous weight when it comes to accepting the offer of a position.”
Employers must also decide at what stage during the recruitment process they should introduce the flex offering to maximise the impact of their scheme on potential recruits. Michael Newstead, head of reward and recognition at human resources services company Ceridian, says that if flex forms part of the total package it is likely to be discussed early on in the process. “Candidates are familiar with total reward statements that show the value of the total package and will expect to be provided with this information early on,” he adds.
It is a tactic that his organisation applies. “When we are recruiting, once we reach the offer stage we give candidates access to our own flex benefits portal allowing them to see what is available, and to calculate the monetary value online,” he explains.
Employers should not be too concerned with offering an extensive choice of perks or the most complex technology so that their scheme stands out from the crowd. As Newstead explains, the most expensive flex schemes are not necessarily the best recruitment incentives.
“Good flex isn’t about loading the scheme with every available product and then offering them to everyone in a scattergun approach. You can create an excellent scheme using cost effective products, for example, those that make best use of salary sacrifice,” he adds.
Childcare vouchers, bikes for work and other tax-efficient benefits can be offered through salary sacrifice enabling employees to save on tax and national insurance on the amount sacrificed and employers on national insurance.
The benefits offered through a flex scheme should also reflect the preferences of future and current employees, Adrian Glew, a director of personal management solutions at benefits consultancy The Personal Group, says: “By reviewing your company demographics and asking current employees what would appeal to them, you can align your benefits closely to employees’ lifestyles and preferences, and those of potential recruits.”
Armed with information gleaned from the current workforce, employers can tailor their flex offering to the needs of potential recruits more accurately.
Although an attractive flexible benefits scheme will grab the interest of high-calibre candidates, employers should also ensure that their scheme and the value of each person’s flex ‘pot’ is competitive.
Motivano’s Denton says: “There is plenty of company analysis available, including salary and total package surveys and benchmarking reports, which allow you to find out what other organisations within your sector are doing. Trends can change very quickly, and should be reflected in what is on offer, so be prepared to monitor the market on an ongoing basis.”
Employers in the legal, pharmaceutical and finance sectors are particularly under pressure to deliver attractive benefits schemes as flex becomes more commonplace in their sectors.
Jelf Group’s Coles says: “Competition for talent in all of these markets is fierce, so they have to continue attracting and retaining the best people.”
With the current pressure to restrict salary rises, offering flex is seen by many employers as a sensible option, however, Stephen Taylor, a senior lecturer in human resource management and organisational behaviour at Manchester Metropolitan University Business School, is more sceptical about its impact as a recruitment tool.
“Flex is much more widespread today. However, I believe that people are generally still quite ignorant about the value of a flexible benefits package. People may tell their friends about it, so it could have value through word of mouth recommendation, but on its own I would be surprised if it made a huge impact on a recruitment strategy,” he says.
However, Coles insists that employers investing in a well-structured flex scheme will benefit with regard to recruitment. “We have already established that introducing flex can reduce staff turnover from 15% to 10%. A company employing 1,000 people might spend £30,000 a year on flex, and take three or four months to implement it. In this case, the company would be losing 50 fewer people, and cutting the costs of unnecessary recruitment. By the second year of your flex scheme, you can start to measure your return on investment on recruitment, ” he says.
Those organisations that invest in flex will, he says, in the long term benefit from an engaged workforce.
Case study: Informa
Keeping flex relevant to the needs of the workforce and in tune with market trends helps ensure its value in recruitment, a fact that Informa, a specialist business information and services consultancy, has taken on board.
The flex scheme offered to its 4,000 UK employees focuses on three areas: value, health and wealth, and is conveyed to potential recruits through the efforts of the human resources and reward divisions.
UK reward manager Linda Hilliard says: “We deliver value by negotiating the best deals ourselves, eliminating the costs of a broker. Our health benefits include gym membership, bikes for work and a healthy lifestyle subsidy payment, while the wealth element of flex includes the trialling of a pilot Financial Services Authority scheme to provide workplace education on personal finance, all of which we believe will appeal to the top candidates.”
Thomas Humphris, human resources director of the trade and energy division, says: “We share the details of our strategy with recruitment companies and encourage them to talk about the total package rather than just salary to candidates. We also educate our own recruitment managers who attend careers fairs and assessment centres to ensure that our flex is communicated in the most effective way.”